Equity Research
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While IPOs get a ton of fanfare for their day-one “pop”, new issues tend to be significantly riskier than other stocks and often underperform the market over longer horizons. Across the largest 20 traditional US IPOs by offer size since 1990, all but five – Medline, Snowflake, AirBnB, Citizens Financial…
Abstract: The IPO calendar has cooled a touch recently but is still on track to be the second-best year on record, with Anthropic set to IPO sometime before Thanksgiving as the second $1+ trillion company to issue in the U.S. this year. Initial rumors are that the company could seek…
Abstract: The Russell 2000 hit correction levels – down more than 10% from its mid-August high – even while the S&P 500 continues to hover within a stone’s throw of its apex. At least some of the move is attributable to the bond selloff as small caps peaked just before…
Abstract: The 493 is Expected to Lead Earnings Growth, But Not Without Energy Consensus expects the S&P 500 to post 24.7% EPS growth on 12.2% revenue growth in 3Q but those headline numbers are hiding a lot of crosscurrents. Odd bedfellows, energy and tech, are expected to lead S&P 500…
Abstract: Equity market valuations are currently in conflict – on a trailing basis, stocks are expensive but on a forward basis stocks are starting to look cheap. Currently, the index trades at 24.7x trailing earnings versus 19.2x forward earnings – 0.9 standard deviations above and 0.4 deviations below recent 5-year…
Abstract: Treasury yields have been surging and rates have been pressuring S&P 500 multiples. Since late last October, the S&P 500 is up about 12.5%, but trailing and forward price/earnings multiples are down 1.7 and 4.1 turns, reflecting the rise in interest rates. Our models suggest that this recent trend…
Abstract: Bond Markets Approach Long Term Norms, Surge Mostly on Improving Growth Outlook Rates across the Treasury curve are one the rise, with the 5-year Treasury bond above 5% for the first time since June 2007 after a poor auction showed limited demand for the tenor, the 10-year Treasury now…
Abstract Since early July, US average diesel prices are up nearly 37% while unleaded gas has risen more than 18%. This is pressuring the consumer from a few different angles. Diesel’s climb has raised shipping costs which could ultimately be passed through to the consumer in end-product prices. Likewise, both…
AI model developers are discussing a slower pace of frontier model development as concerns about safety emerge, and markets are nervous this may materially alter the AI trade. While unusual to hear corporations openly advocate for slower growth, paced development may not necessarily be a bad thing for the market,…
Abstract: Small cap stocks have fared well year to date, powered higher by a resurgence in revenue growth as the AI-infrastructure build has fueled a pickup in economic activity. But as the 10-year has climbed toward 5% recently, the Russell 2000 has lost momentum – bringing into question the size’s…
Abstract: Valuations May Remain in a Downtrend with Interest Rates on the Rise The yield on the 10-year Treasury bond is above 5% for the first time since late 2007, as a strong capital spending cycle and rising commodity prices collide with heavy federal debt loads to reduce the appeal…
Abstract: Presidential Election Cycle Theory generally supports the outlook for stocks next year. According to the theory, created by Yale Hirsch, inventor of the Stock Trader’s Almanac, stocks follow a four-year pattern. On average, the year after midterms (the third year of a Presidential term) is the strongest of the…
Abstract: SpaceX, Anthropic and OpenAI are getting all the hype but the pipeline of US IPOs appears exceptionally strong amid a resurgence in issuance over the past year. Anthropic is likely to be the next mega-IPO, set to go public in mid-October at a valuation that could possibly top SpaceX’s…
Abstract: The AI-powered earnings advance is the gift that keeps on giving to stocks, as the benefits of elevated capital spending have started to spread beyond the tech sector to impact a broad swath of US companies. Every S&P 500 sector but health care, which faced several large accounting charge-offs…
Abstract: Contrary to popular narratives, investment booms of the last 150 years do not show a consistent boom-bust cycle pattern in stocks. Each case recorded a remarkably different price pattern. Some started slow and built equity market optimism over long periods, others raced hard at the start and ended early. …
Abstract: Growth and value indices are sending a lot of mixed messages this year. Russell 1000 growth is underperforming its value counterpart by a wide margin, but also underperforming S&P 500 growth, which is in turn outperforming its value counterpart. This begs the question, is growth or value having a…
Abstract: Breadth Sending Bullish Cues as Capitalization Distorts Sector View Resurgent price breadth and a preference for smaller-cap shares in 2026 have caused the equal weighted Bloomberg 1000 to outperform its cap weighted peer and are likewise driving some notable sector performance divergences. Breadth has recovered smartly after a huge…
Abstract: July was the worst calendar month for Russell 3000 growth relative to its value peer since 2001, and extends a streak favoring value that began last year. From its peak on October 29, 2025, through the end of July 2026, Russell 3000 growth is down roughly 3% while value…
Abstract: The on-again off-again war between the US and Iran, rising bond yields in the face of sticky inflation pressures, and uncertainty around the future of Fed policy may all continue to have some impact on stocks, but the primary driver of equities has clearly shifted back toward AI this…
Abstract: It’s too early to give up on year-to-date sector winners in large caps, according to our sector model, which suggests an overweight position in energy, tech and materials – some of the year’s biggest outperformers. Cyclical sectors at the forefront of our model (energy and materials) have fundamentally benefitted…
Abstract: AI is Powering Up Emerging Market Index Returns But Leaving Most Stocks Behind Emerging market (EM) equities had a stellar first half of 2026, and with their gain of more than 24% in the first half, have more than doubled the return of developed markets, including the U.S. However,…
