Report
Joel Litman ...
  • Rob Spivey

Valens Research US Market Phase Cycle - April 2020

The coronavirus pandemic has pushed the world into an almost certain short-term recession – but that does not need to mean a protracted deep recession or long recovery thanks to credit fundamentals. Favorable bank, corporate, and consumer credit fundamentals heading into this disruption still point to optimism for a strong recovery

Corporate fundamentals and valuations warrant optimism for equity upside if the recession is not protracted. Strong corporate profitability and management optimism about investing point to fundamental reasons for market upside after this short-term overhang is removed

Sentiment indicators remain bearish. Even after a strong rally, to see investor sentiment remain this pessimistic points to ongoing volatility in the near-term, and a straight rise higher is unlikely. Investors should remain patient as Q1 earnings and then Q2 earnings in July are likely to offer continued reason for investor pessimism. We may be at the higher end of a range bound market for the next few months before moving higher in the back half of the year
Provider
Valens Research
Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
  • Stock analyst recommendations are not grounded in disciplined financial analysis
  • Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
  • Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available

We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.

  • Corporate credit ratings remain years behind the fundamental underpinnings of company performance
  • Stock analysts continue to make recommendations with deeply inherent biases
  • Research firms have failed to break down the walls between credit, equity, and macroeconomic research
  • The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming

The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.

Analysts
Joel Litman

Rob Spivey

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