Market Sense
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Analyst expectations for about 8% growth in S&P 500 EPS in the fourth quarter earnings season appear likely to be easily beaten, but the forecast for the index to accelerate the pace and end 2026 with nearly 20% EPS growth remains up for debate. Likewise, our macro model suggests the…
Our macro model for S&P 500 valuations shows multiples have jumped too far ahead of macroeconomic support and this may slow the pace of index price growth in the near term. This model suggested markets were largely undervaluing low interest rates for most of the last two decades, supporting the…
January events could set the tone for stocks in the year ahead, as elevated market multiples imply both the Q4 earnings season and FOMC Meeting are likely to be critical moments that set the stage for equity market direction. Given valuations for the market are well north of levels justified…
The S&P 500 is on pace for a third consecutive year of more than 15% price growth, and if a Santa Claus rally takes shape in the final trading days of the year, it could hit rare air with a third straight year of 20% growth. There is little historical…
After rising for the bulk of the summer, consumer prices finally eased somewhat this fall, and the consumer price index (CPI) hit its slowest pace of growth since 2021 in November. It is too early to call an “all clear” on inflation risks, as autumn data may be somewhat distorted…
Stocks rallied on welcome news of another round of liquidity provision and brightening growth from the Federal Reserve last week, only to unwind the trade (and then some) in recent days. Our valuations Model suggests the equity market may continue to struggle to see a few more Fed cuts as…
The Federal Reserve meeting this week offered more than just a liquidity cue for markets. It also contained hints that the time for AI to morph from tech profits-driver to broader economic force may be emerging. If growth accelerates while inflation eases, as the Fed now expects, S&P 500 profits…
Momentum is the only major factor that is working in the U.S. large cap equity market in 2025, as well as in the bull market that began in 2023. The total return spread between high momentum and low momentum stocks is up 9% so far this year, far outpacing all…
AI stocks’ earnings dominance has resulted in bloated multiples for S&P 500 tech, media and telecom (TMT) stocks, as investment dollars concentrated in the strongest growth opportunities in the index. However, the analyst consensus sees a more normalized environment for earnings emerging with policy support in 2026. This closing of…
