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The US equity market is facing big valuation headwinds from rapid shifts in expectations for Federal Reserve policy near-term and a market view that rates will be higher in the long term. With yields surging, the market has relied on ever-higher earnings estimates to stay afloat as we approach Q1 earnings. High earnings estimates make this season a unique risk for the market as the post-COVID bonanza in beats trails off. Foreign central banks are also getting in on the game as interest rates surge into positive territory in the Eurozone. We discuss French elections with the first round of voting this Sunday, as well as touching on policy in Russia and China. Global trade frictions appear to be easing, and used auto prices have started to fall, both of which offer a sunnier picture for inflation. We also look at earnings Triple Plays, credit markets, the strong dollar, the outlook for the Fed’s balance sheet, oil markets, big NASDAQ drops, equity market dividend yields, recession probabilities, and more in this week’s Bespoke Report.
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