Valens Market Phase Cycle Monitor & Corporate Credit Macro View for September 2021

• You Can’t Have The Growth Stage Of A Bull Market Without Growth. The speed of the recovery in return on assets after the pandemic highlights the resiliency and strength of U.S. corporate profitability. At current valuations the market is expecting this to continue and for growth to be above average going forward. However, in the near-term, subdued management confidence limits growth, which limits equity upside and may even create more near-term volatility.
• Even after the recent pullback, investor sentiment also remains excessively bullish. Combined with high inflation and lingering macro concerns (including Delta risks), this creates further risk to the market. This could further contribute to continued near-term volatility.
• However, any dip due to near-term growth or sentiment issues is a dip to continue to buy, thanks to the bedrock of any bull market, healthy credit. Credit metrics show healthy availability of credit from both credit markets and banks, and no risk of defaults. That means the risk of a pullback turning into a bear market is exceptionally low.
• Timetable Recommendation: 50/50 Split for 5-10 Year Money and upgrade to 12 Month Dollar Cost Averaging.