Stocks at a Crossroads

By Lori Calvasina
Published May 16, 2022 | 9 min listen

This week in the podcast, our latest thoughts on economic expectations, sentiment, and valuations. The big things you need to know: First, the S&P 500 is still trading as though it’s experiencing a growth scare, a framework that has been pointing to downside in the S&P 500 to ~3,850. Current trends in economic forecasts continue to support the idea that this is the right way to think about how far stocks should fall. Second, institutional investor sentiment has made significant progress catching down to retail investor sentiment, with overall US equity futures positioning among asset managers now below 2020 & Great Financial Crisis lows, and getting close to 2011 and 2015/2016 lows – something that makes the case for a bottoming in stocks relatively soon if recession fears can be kept at bay. Third, while valuations aren’t yet a reason to buy US equities on their own, they are no longer a problem for the market as a whole.

Disclosures and Disclaimers

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Lori Calvasina

Lori Calvasina
Managing Director & Head of U.S. Equity Strategy, RBC Capital Markets

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