Valens Market Phase Cycle Monitor – May 2022 – The Worst Is Likely Behind Us, A Positive Catalyst For H2 2022

May 19, 2022

  • The Worst Is Likely Behind Us, That’s A Positive Catalyst For H2 2022. Investors have become spooked about headline risk wherever they look. However, most of these headlines have peaked in terms of the risk they can create. Concerns about inflation and geopolitical risk have created significant near-term volatility in the stock market, presenting an opportunity for investors.
  • The market has also been spooked about the dramatic 200bps+ rise in the cost to borrow across U.S. corporate markets, with the Fed still raising rates. However headline rates are unlikely to continue to spike, and corporate credit remains very healthy.
  • U.S. corporates are remarkably profitable and growth is starting to accelerate.
  • Monthly inflections:
    • Credit (55% of macro outlook): Neutral (negative 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 upgrade to 10 Month Dollar Cost Averaging.

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