Policy and market damage means volatility likely to stay for a while
Despite a recent respite, our indicators tell us that market volatility is likely to stay elevated for a while longer, with important implications for asset allocation and stock selection. Significant damage is being done to the US economy and the global trading system. After several years of relatively calm equity markets despite volatility in bond […]
US giving up leadership in markets and fundamentals
The big theme in markets and in Mill Street’s work with clients recently has been the dramatic shift in leadership away from the US and toward the rest of the world, especially Europe. Risk appetite has weakened as US economic policy uncertainty has skyrocketed and the growth outlook has deteriorated, making equities riskier in our […]
Do growth and margins justify higher S&P 500 valuations?
A recent client question: Q: “Have you done any work on the multiple of the S&P 500 and the growth rate and margin/profitability of the S&P 500? Many strategists say margins are peaking for the S&P 500, margins can’t go higher and that the multiple therefore can’t go higher. But one view is that we […]
Outlook for 2025
Outlook for 2025: Mill Street Research does not make “official” calendar year forecasts as we always follow the evolving messages from our objective indicators throughout the year, but in response to client interest, below we share some of our views going into 2025. The good news The US economy has done remarkably well and has […]
Growth expectations are higher, but are they justified?
The Mill Street Research Implied Growth Model, described in more detail in a March post, shows higher long-run earnings growth expectations built into market prices. Given current conditions and the composition of the S&P 500, this may be justified, but means growth concerns will continue to dominate inflation or other worries for stock prices. Long-run […]
China: “Magnificent 5” disguising continued weakness
We maintain our long-standing very cautious stance on China, despite some signs of more positive earnings indicator readings caused by a handful of mega-cap Chinese stocks (that we call the “Magnificent 5”). Outside of those few stocks, our data shows that most Chinese stocks still have very negative earnings trends, and the economy remains weak. […]
Are fundamentals being rewarded?
Are fundamentals being rewarded in stock selection in the post-COVID period? Based on the results of our MAER stock selection model, the answer has been “yes” since the end of the “COVID year” of 2020. There has long been a debate about the degree to which stock prices reflect trends in underlying fundamentals (corporate earnings) […]
A closer look at the global Tech sector
A key part of Mill Street’s work is tracking US and global equity sector and industry trends using a mix of bottom-up (aggregated company data) and top-down (macro data) inputs. The Technology sector naturally gets a lot of attention from investors, and we have shifted our view on it recently in response to changes in […]
Combining macro and micro the Mill Street way
One of the distinguishing features of Mill Street’s research process is that it can give both “top down” views on the macroeconomic and asset allocation outlook, or “bottom up” quantitative stock selection based on our long-standing tools like the MAER ranking model. But it is often most interesting and compelling when we do both: start […]
Small-caps struggling despite strong economy
The US economy keeps surprising to the upside, forcing economists and the Fed to catch up. Commentary from Fed officials has shifted to favoring rate cuts later rather than sooner, meaning policy rates will stay at current high levels a while longer. And while major stock indices have been sensitive to movements in bond yields […]