Valens Market Phase Cycle Monitor – February 2022 – Geopolitical Risk Is For Reporters, Not Investors

February 17, 2022

  • Geopolitical Risk Is For Reporters, Not Investors. Concerns about inflation and geopolitical risk have created significant near-term volatility in the stock market, presenting an opportunity for investors.
  • U.S. corporate profitability has recovered impressively since the pandemic. Now, investment growth appears to be accelerating to match strong profits based on credit growth and management sentiment indicators. U.S. corporates are remarkably profitable and growth is starting to accelerate.
  • Credit markets remain supportive of profitability and growth through the cycle, and the Fed raising rates won’t disrupt these signals. This facilitates the market rising and limiting any risk for a downside shock.
  • Monthly inflections:
  • Credit (55% of macro outlook): Bullish (no change)
  • Earnings Growth (30%): Bullish (no change)
  • Momentum/Sentiment (10%): Neutral/Positive (upgrade)
  • Valuations (5%): Negative (no change)
  • Timetable Recommendation50/50 Split for 5-10 Year Money and upgrade to 7 Month Dollar Cost Averaging.

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