Valens Market Phase Cycle Monitor – January 2024 – The Market’s Expectations Don’t Line Up With Predictive Economic Indicators
January 18, 2024
- The Market’s Expectations Don’t Line Up With Predictive Economic Indicators. Corporate Credit Metrics Are Showing Signs Of Growing Stress. Credit availability is lacking, and corporations and individual consumers are starting to show pressure from credit tightening. Credit issues highlight the risk of a recession growing.
- Slowing lending continues to push management teams to be more cautious. Uniform earnings growth continues to decelerate. Profits are forecasted to decline, and multiple signals for investment show decelerating management confidence.
- After the recent strong bounce-back rally, the market is back towards neutral sentiment levels.
- Monthly inflections:
- Credit (55% of macro outlook): Negative (no change)
- Earnings Growth (30%): Negative (no change)
- Momentum/Sentiment (10%): Neutral (no change)
- Valuations (5%): Negative (no change)
- Timetable Recommendation: 40% Equity/ 60% Bond Split for 5-10 Year Money and 22-Month Dollar-Cost Averaging.
