Valens Research US Market Phase Cycle - June 2019
Investors may find pause in buying a market approaching all highs, but improving credit signals provides confidence in buying the Bull market.Business credit has been flashing early warning signs for 2020 or 2021, providing a market overhang. Recent signals give reasons to think this overhang has been removed, potentially confirming an all clear sign for the next year and beyond
Profits and profitability continue to rise to all-time highs across US corporations (UAFRS-adjusted, accurate calculations)
US firms are likely to use profits to increase capital investments in 2019
The combination of profitability and growth, with low-to-no credit risk, suggests continued US equity upside in 2019
Investor sentiment has remained neutral even after the recent rally back to all-time highs, implying this rally is not extended and there is still room for the market to run
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.
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