Quantitative Profiles Notes From The Road

This report examines the potential shift of the US economy into a 'Mid-Cycle' regime, suggesting a pivot from prioritizing speculative top-line growth to focusing on capital efficiency, margins, and earnings yield.

Key Takeaways

• 1.The US Regime Indicator potentially shifted to Mid-Cycle, where factors like Value, Momentum, and Small Size typically outperform.
• 2.Current long-term earnings growth expectations for the S&P 500 are at record highs, which historically sets the market up for potential disappointment.
• 3.White-collar labor risks are at multi-decade highs, as college graduates see historically high unemployment rates and reduced wage contributions.

Table of Contents

• Client question we didn't get: "Where are we in the cycle?"
• Investors won't settle for anything but explosive growth!
• Buy what's scarce. Top-line growth isn't.
• Labor by # vs. dollars is an "underappreciated theme"
• US Regime Indicator improved in April testing Mid Cycle
• Mid cycle factors within capital allocation baskets
• Special focus: "Investors won't settle for less than explosive growth"
• Special focus: "Buy what's scarce, not sales growth"
• Special focus: Labor by the # vs. dollars is an underappreciated theme
• Pushback on no Software capitulation/no Semis bubble
• In focus: Efficiency drives shareholder value – 2 factor to use
• Screens
• Value vs Growth
• Performance and positioning
• Valuation Backdrop