It’s nearly the end of the month, a good time to take a look at our “Fav 5” LEI index and it’s relationship to other cyclical areas of the market. As we’ve laid out in detail this year, we expect leading economic indicators (PMIs, NAHB, NFIB, Confidence, Housing Starts, etc.) to continue...

Q2 EPS Season Has Been Disappointing So Far … We’ve seen a lot of earnings misses so far in Q2. Unfortunately, we don’t expect the earnings backdrop to improve again until the next PMI recovery (likely a 2023 story). As the economic landscape deteriorates, NTM earnings of the most...

Quick HOPE Update! We continue to see the HOPE cycle play out in this downturn at a rapid pace. Today’s COLLAPSE in the NAHB home builder index only further reassures us that the economy is heading into a long and challenging recession. We are now at the Profits stage of the HOPE cycle where we...

As this downturn unfolds, I can’t help but keep being reminded of how much of a mirror image the backdrop is today as compared to 2020 and 2021. Why didn’t we hear investors scream “it’s all priced in” when Pfizer announced vaccine news in Nov 2020 when: 1) the market was already at a new all-time...

Any time a “problem” (in this case high inflation) begins to improve, a “junk” rally in the area that was most negatively impacted by the problem is likely. We are used to “junk” value rallies at the bottom of the bear market as leading indicators of the economy turn up (PMIs) and junk value...

The last time small businesses saw inflation as this much of a problem (NFIB Survey) was back in 1979/1980. As inflation fell for small businesses, slower sales growth took over as the biggest problem in the early 80s as the economy fell into a recession. During that transition of peak inflation...

We’re in the midst of the 4th bear market rally of this bear market – we are likely to many more before we find THE bottom in 2023. We’re expecting bear market rallies to be fast and furious, rather than long and steady. This is because we’re in a tug-o-war between inflation and growth. And until...

How bad will the ISM miss? RH just reported and trimmed its outlook (i.e., estimates are TOO high) and the stock is down. That is going to be the pattern over the next several earnings seasons until investors right-size their earnings estimates, away from the bubble-driven 2021 numbers, towards an...

It’s safe to say that both the “H” (housing) and “O” (orders) segments of our HOPE framework are getting ugly. One client said our call, for fears to migrate from inflation to PMI/EPS/GDP, is now consensus. He asked, “so, what’s next?” The answer is profits decline and then employment (claims)...