RBC's Markets in Motion

Today in the podcast, we’re focusing on the results of our quarterly RBC analyst survey, which we conducted in late March and helps us incorporate the bottom-up views of RBC’s team of equity analysts into our top-down strategy sector recommendations. Five big things you need to know: First, outlooks among our analysts for performance over the next 6-12 months continue to tilt positive. Second, on performance over the next 6-12 months, our analysts remained highly constructive on Financials, Health Care, and Technology, but enthusiasm on Energy faded. Third, on issues other than performance, Health Care and Utilities generally rank well relative to other sectors. Fourth, as for what’s keeping our analysts up at night, many mentioned demand related issues in their discussions of key upside and downside risks. Fifth, triggered by our survey results, as well as our desire to reduce exposure to Value, we are lowering our recommendation on Energy from overweight to market weight.

This week in the podcast, guest host Sara Mahaffy, RBC’s ESG Strategist, runs through the team’s latest work on ESG flows. Inflows into US listed ESG ETF’s have been relatively strong so far in early March, and we’ve seen relative performance trends for ESG darlings stabilize. Clean energy flows have also bounced back in March.

This week in the podcast, we run through a few new thoughts on Russia /Ukraine from a US equity market perspective. Three big things you need to know: First, the big, obvious risks to our call on the S&P 500 are the possibility that the war will turn into a prolonged conflict involving NATO or the possibility that the US will slip into recession. We took a look at the historical playbook for stocks during WW2 and past recessions as a starting point for how to think about possible downside levels in the index should either of these risks materialize. Second, we are starting to see some shifts in momentum in political polling data back in Biden and the Democrats’ favor, which are worth keeping a close eye on given the mid term elections coming up in November. Third, public company commentary on the Russia/Ukraine crisis has surged and while most companies have said direct exposure is minimal, the broader conversation reflects a significant degree of uncertainty surrounding the impact of the event – reinforcing to us that the stock market either needs more time to digest what’s happening or an outright de-escalation of the conflict in order to stabilize.

In this week’s podcast, we run through the takeaways from our latest Macroscope report, our big monthly chart book in which we update our thoughts on the US equity market outlook from both a top-down and bottom-up perspective. We know all eyes are focused on Russia and Ukraine, but we thought it's important to pause and reflect on where things are at this particular moment in time. Three big things you need to know: First, we continue to see a path for the S&P 500 to our 2022 year-end price target of 5,050, but remain mindful of risks to our view. Second, we’re getting closer to an inflection back to Growth leadership. Third, Small Cap outperformance vs. Large Cap since early February seems deserved, but we suspect that it will be short-lived.

This week in the podcast, our latest thoughts on Russia’s invasion of Ukraine from a US equity market perspective. Three big things you need to know: (1) First, while the duration of growth scares in the S&P 500 since the Financial Crisis has varied, recoveries tend to be quick and powerful. (2) Second, individual investor sentiment took another hit last week and remains below pandemic lows - a contrarian buy signal for stocks. (3) Third, while stocks have fallen a bit more than we expected to start the year and we are mindful of risks to our view, we are sticking with our 5,050 year-end S&P 500 price target for 2022.

This week in the podcast, we run through our thoughts on what a Russian invasion of Ukraine might mean for US equity markets going forward. Three big things you need to know: First, US public companies haven’t been talking much about geopolitics or Russia/Ukraine recently, but the level of conversation is starting to pick up. Second, RBC’s US equity analysts see the potential for slowing growth/recession in Europe, higher energy prices, and potential impacts on supply chains as the most relevant challenges for their industries if a Russian invasion of Ukraine occurs. Third, we continue to believe that geopolitical risk emanating from Russia/Ukraine is not priced into the US equity market, should conditions worsen, and will be a key issue to watch in the weeks and months ahead.

This week in the podcast, we run through our latest thoughts on earnings, sentiment, trends in high frequency indicators, and Russia. Five big things you need to know: First, with 4Q21 reporting season starting to wind down, the earnings outlook remains stable. Second, in terms of the rate of upward EPS estimate revisions, Value and Cyclicals continue to outshine Defensives and Secular Growth. Third, retail investor sentiment has started to stabilize on the AAII survey and positioning in Nasdaq and Russell 2000 futures also suggests both Growth and Small Caps are oversold. Fourth, high frequency indicators are still recovering for the most part, casting doubt on recession fears. And fifth, while we continue believe the Fed is mostly priced in to the S&P 500, a Russian invasion of Ukraine may not be and currently presents one of the key risks to the stock market.

This week in the podcast, we run through our main takeaways on 4Q21 reporting season, with just over half of S&P 500 results in. The big things you need to know: First, the earnings resiliency we discussed in our last Spotlight solidified over the past week, supporting the stock market. Second, early sector standouts include Tech, Energy, and Health Care. Third, our quantitative transcript review suggests confidence has slipped a little, along with demand and margin views. Fourth, our manual review of earnings calls transcripts has kept us vigilant on the consumer, but not panicked.

This week in the podcast, we run through five good things we’re seeing in the data right now for the broader US equity market right now. First, bottom-up 2022 and 2023 EPS forecasts have been holding steady. Second, the contraction in the S&P 500 forward P/E is in line with past Fed tightening periods. Third, the valuation gap between the most expensive and least expensive stocks is getting close to pre-pandemic levels. Fourth, retail investor sentiment is back to pandemic lows. Fifth and finally, Small Cap futures positioning is on the cusp of net short territory, and isn’t too far above where it bottomed in March 2020.

In this episode, we run through early takeaways from the 4Q21 earnings reporting season, a few new thoughts on the Growth/Value rotation, and an update on investor sentiment. Four big things you need to know: First, performance has been poor, with 63% of S&P 500 companies falling significantly post results and companies missing on revenues getting hit hardest. Second, our transcript review suggests that labor is emerging as the new hottest topic, and that omicron disruption may have been greater than anticipated. Third, our valuation work suggests that progress has been made on the Growth rotation, but that it still has room to go. Fourth, retail investor sentiment is close to pandemic lows, a positive for stocks on a 12-month view.

In this edition of the podcast, we discuss the biggest takeaways from the publication of Macroscope, our big monthly chartbook digging into the US equity market from top to bottom, looking at everything from the S&P 500 to style to sectors to industries to factors and Small Caps. Two big things you need to know. First, we’re sticking with our 5,050 forecasts for the S&P 500 at year-end 2022, a tougher year but one that ultimately sees modest gains. Second, while we still like Value and Cyclicals in early 2022, we’ve lost faith in Small Caps’ ability to see an early year outperformance trade and dig into the reasons why.

In this edition of the podcast, we review our latest thoughts on the fierce rotation we’re seeing from Growth to Value and Cyclicals so far in 2022. Two big things you need to know: (1) We think it’s premature to declare the rotation out of Secular Growth into Value and Cyclicals over yet. (2) We’ve continued to get questions about what to own in a rising rate environment – our answer is pretty simple – sell what’s expensive (a list still dominated by Tech) and buy what’s cheap (a list still full of commodities and Financials).

This week in the podcast, we run through the results of our quarterly RBC US equity analyst survey, which we conducted in late December 2021. The big things you need to know: First, our analysts’ outlooks for performance over the next 6–12 months remain optimistic, boosted by constructive views on fundamentals, valuations, cash deployment, and margins. Second, across all questions, our analysts tilt positive on Energy, Financials, Materials, and Information Technology, along with Utilities and Health Care. Third, key issues in focus for our analysts are demand, COVID, inflation, regulation, labor, supply chains, and pricing power. What jumped out the most on hot topics is that our analysts generally see their companies as able to manage through the major challenges ahead, including Omicron.

This week in the podcast, we’re running through the results of our December US equity investor survey, conducted December 16th through 21st. Three big things you need to know: First, half of investors are optimistic on stock market performance over the next 6-12 months, supported by constructive views on the economy and cash deployment, but weighed down by concerns about valuations, policy and margins. Second, in terms of hot topics, monetary policy and inflation top the list of issues keeping investors up at night. Third, in terms of positioning, High Quality, US, and Large Caps, were the most popular choices for outperformance over the next 6-12 months, as the popularity of Value, Cyclicals, Financials and Energy faded.