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.
S&P
The Earnings Shoe Dropped
The earnings shoe dropped this week following notable earnings misses by Walmart and Target. This led to a significant sell-off, as the market started to question the current estimates of robust earnings growth in 2022 (+10.2%) and 2023 (+10.1%). This also means that stock valuations aren’t as attractive as forward PE estimates suggest. The Fed […]
Bitcoin is Coming to Retirement Plans
Bitcoin is coming to 401(k) retirement plans as Fidelity hopes to offer access to the 23,000 plans it administers. This move by the largest plan administrator, with $2.7tn in plan assets, should drive long-term bitcoin adoption. It will not, however, change the bear market that is currently underway in many assets. The pain in crypto […]
Explosion of Crypto Legislation Proposals
There has been an explosion of crypto legislation proposals from US politicians. The bogeyman of late has been sanctions evasion, even though the Treasury Department has repeatedly said that there’s no sign of evasion via crypto. Many of these proposals are unlikely to see the light of day in current form in our polarized political […]
The Price of Passive ETFs
This week, we’ve started to see the price of passive ETF investing. A rising number of ETFs have funneling money into the same large cap tech stocks leading to elevated valuations. These flows are now reversing and we are discovering the inherent problem of ETFs aiming to trade near the market close. ETFs promise to […]