The big things you need to know:First, we review the bull thesis that we heard in client meetings last week, and our thoughts on where it could go wrong.Second, we review how the rally in equities has been looking a bit overdone on our valuation and EPS modeling, and how we’re also starting to run out of room on one of our sentiment studies.Third, conditions are rather mixed for US equities at the moment. We walk through things that look good, and things that look not so good. In the latter camp, one thing that stands out as particularly important to us is the failure of c-suite sentiment in widely followed surveys to inflect positively, as has been the case with consumer, small business, and investor sentiment surveys.
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10:21
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10:21
Mid-Year 2025 Global Analyst Outlook Survey; US Sector Recommendation Changes
Four big things you need to know: First, globally our analysts are constructive on performance over the next 6-12 months. Second, driven in part by our survey results, we are making six changes to our US sector calls – we dig in a little deeper to the upgrades of Materials, Consumer Staples, and REITs here. Third, while we don’t make recommendations on non-US sectors, we do highlight how Financials is a favorite across the globe among our analysts. Fourth, improving 2026 consensus GDP forecasts are a positive outlier for the US compared to our other coverage regions, which we think has been helping boost US performance.
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6:05
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6:05
Recapping Our Biggest Call of the Year
For all my Buy-side friends - If you find our research and podcast helpful, we'd appreciate your vote in Portfolio Strategy in this year's Extel/II survey (www.extelinsights.com/voting). Voting is open until Friday, June 27th. Listen to this episode for a recap of our biggest call of the year...Or watch my video message - https://players.brightcove.net/6021289101001/VyvCc9BZx_default/index.html?videoId=6374546435112
The big things you need to know:First, solid earnings stats are in place as US equity investors wait for the onset of 2Q25 reporting season.Second, the latest Business Roundtable survey highlighted weaker corporate vibes relative to March, echoing the tone in last week’s earnings call transcripts to some degree for Russell 3000 companies, where cost containment discussions jumped out to us.Third, we recap our views on how we’re thinking about the recent developments in the Middle East from a US equity market perspective.
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6:32
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6:32
The Recent Escalation in the Middle East From a US Equity Lens
The big things you need to know:First, the conflict in the Middle East comes at a complicated time for the US equity market, as our sentiment and seasonality work has been suggesting stock prices could keep moving up, while our valuation/earnings and GDP analysis has been suggesting that the stock market has gotten ahead of itself. We highlight the three potential challenges we see for the US equity market from this conflict, which we are monitoring closely.Second, we revisit our four tiers of fear framework, which helps us map out potential downside in US equities from the conflict, particularly if conditions escalate and broaden out.Third, Energy and Materials seem most likely to outperform if the conflict results in a sustained oil price spike, while Consumer Discretionary and Communication Services seem most likely to underperform. We’re also keeping an eye on Utilities and REITs as potential, tactical outperformers.
Our regular podcast from Lori Calvasina, Head of US Equity Strategy, that brings a fresh perspective and nuanced, data driven view on the forces shaping U.S. equity markets.
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