Trading Like Fed Is Done, Case For Valuation Expansion, EPS Sentiment Improves
By Lori Calvasina
Published February 7, 2023 | 6 min listen
This week in the podcast, we touch on hot topics and interesting things that jumped out in our inbound client questions and high frequency indicators. Four big things you need to know: First, recent sector leadership within the S&P 500 is consistent with what we’ve seen in the past after final Fed rate hikes. Second, we continue to find that investors are interested in debating what kind of P/E multiple the S&P 500 deserves in light of current interest rate and inflation assumptions. With this in mind, we’ve refreshed our valuation model which makes the case for valuation expansion as inflation moderates. Third, earnings revisions trends are getting less negative for most S&P 500 sectors, suggesting that sentiment around earnings is improving at the margin, helping explain why the stock market has surged despite estimates continuing to fall in dollar terms. Fourth, we highlight what jumped out from our high frequency indicators last week. Correlations within the S&P 500 and Russell 2000 are falling, and the most popular stocks in hedge funds are outperforming – positive data points for stock pickers and broader US equity market returns.
Lori Calvasina
Managing Director & Head of U.S. Equity Strategy, RBC Capital Markets
Lori Calvasina joined RBC Capital Markets as Head of U.S. Equity Strategy in 2017 as a Managing Director. Having spent nearly two decades as an equity strategist at major investment banks, Lori is an expert on the US stock market, and regularly represents RBC in the financial media on Bloomberg and CNBC. Prior to joining RBC, Lori was a senior equity strategist at Credit Suisse from 2010 to 2017, covering Small/Mid Cap Strategy from 2010-2014 and both Small/Mid Cap and US Equity Strategy from 2015-2017. She spent the first ten years of her career at Citi in a variety of roles including lead Small/Mid Cap Strategist from 2007-2010. In both 2008 and 2009 Lori was ranked #2 in the Small Companies category in the Institutional Investor All America Research team poll. Lori is a graduate of the University of Virginia and its selective Government & Foreign Affairs’ Honors Program. In 2019, she was named to Crains New York’s list of Notable Women in Finance.
Equity MarketLori CalvasinaMarkets in MotionRBC Podcast