Valens Market Phase Cycle Monitor – December 2022 – The Market Follows Earnings Growth, And Earnings Growth Just Turned Negative

December 15, 2022

  • The Market Follows Earnings Growth, And Earnings Growth Just Turned Negative. A mix of U.S. corporate investment growth deceleration and profit pressures has turned U.S corporate earnings growth negative. For 2022, Uniform earnings growth is forecast to be -3%, and until that trend changes, the market can’t engage higher.
  • Credit signals continue to point to a significant tightening of lending availability. Healthy corporate and consumer balance sheets limit the risk that leads to a credit rout. Tighter credit availability is likely to reduce investment going forward.
  • After the recent rally, sentiment is neutral while valuations are now reasonable to elevated. This appears to signal we’re at the higher end of a sideways market.
  • Monthly inflections:
    • Credit (55% of macro outlook): Negative (no change)
    • Earnings Growth (30%): Neutral (downgrade)
    • Momentum/Sentiment (10%): Neutral (no change)
    • Valuations (5%): Neutral (downgrade)
  • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 20 Month Dollar Cost Averaging.

You don’t have access to the Valens Research Premium Application.

To get access to our best content including the highly regarded Conviction Long List and Market Phase Cycle macro newsletter, please contact our Client Relations Team at 630-841-0683 or email

Please fill out the fields below so that our client relations team can contact you

Or contact our Client Relationship Team at 630-841-0683