Valens Market Phase Cycle Monitor & Corporate Credit Macro View for May 2020

• The data says expect a retest of the lows, but it says don’t
  panic during it, buy. The coronavirus pandemic has pushed
  the world into a short term recession and credit spreads
  point to near term disruptions but that does not need to
  mean a protracted deep recession or long recovery thanks
  to credit fundamentals. Favorable bank, corporate, and
  consumer credit fundamentals heading into this disruption
  still point to optimism for a strong recovery, but credit
  spreads point to near term volatility
  
• Corporate fundamentals and valuations warrant optimism
  for equity upside if the recession is not protracted. Strong
  corporate profitability and fundamental factors driving a
  need to invest point to fundamental reasons for market
  upside after this overhang is removed
  
• Sentiment indicators remain bearish. Even after a strong
  rally, to see investor sentiment remain this pessimistic
  points to ongoing volatility in the near term, and a
  continued straight rise higher is unlikely. Investors should
  remain patient as after Q1 earnings, Q2 earnings in July are
  likely to offer continued reason for pessimism. We may be at
  the higher end of a range bound market for the next few
  months before moving higher in the back half of the year