This Dispatch updates our US recession and earnings outlook. Forward-looking macro indicators like the LEI point to further slowing. June Quarter ex-energy earnings declined YoY, and Wall Street is finally starting to cut estimates. Yet, the dominant narrative we hear is that that earnings are growing, and valuations are now attractive. As we’ve previously written […]
Market Updates
Crypto Selloff Exposed Incompetence
The 2022 crypto selloff exposed the incompetence and hubris in many traditional crypto companies. For example, Celsius had a $1.2bn balance sheet hole on client assets of $4.7bn by the time it filed for bankruptcy. Listed Canadian company Voyager had to declare bankruptcy because it provided a loan of $674m with zero collateral. Other companies […]
Have Stocks Bottomed?
The S&P just recorded its best month since November 2020, so it’s worth asking if stocks have bottomed. Bear market rallies are normal, and we do not believe the bottom has been reached for this cycle. If the low was reached in June, then it would be the most expensive valuation (PE) bottom. Furthermore, earnings have yet to be cut meaningfully. Recessions have almost always led to large earnings reductions and we anticipate cuts in the 2H as macro conditions only really tightened in May and June.
Market Tea Leaves for 2H22
As July approaches, let’s read the market tea leaves for 2H2022 and beyond. Over the past few weeks, markets have priced a broader growth scare as commodity equities sold off sharply and Treasuries priced a lower and earlier peak in Fed Funds rate. However, bonds markets were blind to the inflation surge, so why should […]
Crypto Breaks Cyclical Patterns
The current price action makes it increasingly clear that crypto breaks cyclical patterns of the past. In bitcoin’s short three-cycle history, each cycle saw the token price drop to the 200-week moving average (wma) at the depth of the bear market. However, the price did not fall below the prior cycle high. The current price […]