Valens Market Phase Cycle Monitor – June 2022 – 6% Nominal GDP Growth in A Recession Makes It Not One

June 23, 2022

  • Having 6% Nominal GDP Growth in A Recession Makes It Not A Recession. Investors have become spooked about inflation, and the Fed creating a recession as it tries to stamp out inflation. In fact, some think we’re already in a recession. Concerns about inflation and growth have created significant near-term volatility in the stock market, presenting an opportunity for investors.
  • U.S. corporates are remarkably profitable, and growth is starting to accelerate. U.S. corporate growth helped power 6% nominal GDP growth last quarter, and shows no signs of slowing down, showing the real picture of where the market should be focused.
  • Credit levels are still not flashing warning signs of a credit freeze.
  • Monthly inflections:
    • Credit (55% of macro outlook): Neutral (no change)
    • Earnings Growth (30%): Bullish (no change)
    • Momentum/Sentiment (10%): Positive (no change)
    • Valuations (5%): Positive (positive change)
  • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 10 Month Dollar Cost Averaging.

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