Green Book December 2022
Calling “Bull” On Calls For A New Bull
Seriously, another “new bull”—coming so quickly after this summer’s “new bull?” We’ll see. We’re not ones to dismiss price action, because stock prices, in and of themselves, are an important “fundamental.”
But we’ve seen the Dow go rogue like this once before, and it didn’t end well.
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Featured Articles
Research Preview: Inflation And Margins
A new study looking at the relationship between inflation and profit margins is introduced. The goal is to understand how the latest margin peak was reached in mid-2021 and what impact inflation might have on margin forecasts underlying next year’s earnings estimates. Full report will be sent mid-month.
Not If, But When
Economists who believe a 2023 recession will be avoided, may not know it but they are “messing with perfection.” Since August, we’ve chronicled several developments that have, without fail, correctly forecasted past recessions, or confirmed that one was already underway.
Third Quarter 2022 Earnings Waterfall
This earnings season has not been free of concern, and profit margins are clearly weakening from last year’s highs. Our earnings waterfall template highlights several themes coming out of third quarter results.
Illiquidity Rules The Day
Nearly everyone would cite high inflation as the dominant theme of 2022. But we think that the evaporation of a one-time ocean of liquidity better explains the horrendous backdrop for stocks and bonds. High inflation sped up the rate of evaporation, but it was going to occur anyway.
Estimating the Downside - Decemeber 2022
The mid-October market bounce extended through November. The S&P 500’s monthly gain (+5.4%) stretched both of our downside-to-median estimates by congruent amounts. Since September 30th, downside for our “New Era” (1995-to-date) weighted average widened from -5% to -17%.
Table of Contents
Stock Market
- Calling “Bull” On Calls For A New Bull
- Illiquidity Rules The Day
- Don’t Trust The Thrust…
- Goodbye Inflation, Hello Recession?
- The Inversion Before The Inversion
- Not If, But When
- “The Streak” Is In Jeopardy…
- Mixed Messages From VLT
Of Special Interest
Macro Monitor
- Fed Funds Rate Above The CPI—Inflection Point Likely
- Risk Aversion Index: Stayed On “Lower-Risk” Signal
Market Internals
- Earnings Momentum
- Small Cap vs. Mid Cap vs. Large Cap
- Growth vs. Value vs. Cyclicals
- Additional Factors
Major Trend
Estimating the Downside
At Random
Research Preview: Inflation And Margins
A new study looking at the relationship between inflation and profit margins is introduced. The goal is to understand how the latest margin peak was reached in mid-2021 and what impact inflation might have on margin forecasts underlying next year’s earnings estimates. Full report will be sent mid-month.
Not If, But When
Economists who believe a 2023 recession will be avoided, may not know it but they are “messing with perfection.” Since August, we’ve chronicled several developments that have, without fail, correctly forecasted past recessions, or confirmed that one was already underway.
Third Quarter 2022 Earnings Waterfall
This earnings season has not been free of concern, and profit margins are clearly weakening from last year’s highs. Our earnings waterfall template highlights several themes coming out of third quarter results.
Illiquidity Rules The Day
Nearly everyone would cite high inflation as the dominant theme of 2022. But we think that the evaporation of a one-time ocean of liquidity better explains the horrendous backdrop for stocks and bonds. High inflation sped up the rate of evaporation, but it was going to occur anyway.
Estimating the Downside - Decemeber 2022
The mid-October market bounce extended through November. The S&P 500’s monthly gain (+5.4%) stretched both of our downside-to-median estimates by congruent amounts. Since September 30th, downside for our “New Era” (1995-to-date) weighted average widened from -5% to -17%.
Stock Market
- Calling “Bull” On Calls For A New Bull
- Illiquidity Rules The Day
- Don’t Trust The Thrust…
- Goodbye Inflation, Hello Recession?
- The Inversion Before The Inversion
- Not If, But When
- “The Streak” Is In Jeopardy…
- Mixed Messages From VLT
Of Special Interest
Macro Monitor
- Fed Funds Rate Above The CPI—Inflection Point Likely
- Risk Aversion Index: Stayed On “Lower-Risk” Signal
Market Internals
- Earnings Momentum
- Small Cap vs. Mid Cap vs. Large Cap
- Growth vs. Value vs. Cyclicals
- Additional Factors
Major Trend
Estimating the Downside
At Random
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