RBC's Markets in Motion

Two big things you need to know:First, forward P/Es have generally been de-frothed, but haven’t looked deeply compelling for the major US indices.Second, the valuation case for the broadening trade still has some room (Small Caps, certain cyclical sectors, non-US developed market equities), but requires close monitoring.

The big things you need to know:First, the stock market is still experiencing a growth scare, in our view, where it is attempting to stabilize. We see more downside if recession is priced in.Second, we review how the process of resetting EPS expectations has begun, and run though key themes from the early reporters and companies that have presented at conferences since the Rose Garden. Our overarching takeaway from our reading is that recession is not yet a foregone conclusion but also that US equities are not out of the woods.Third, we run through our latest thoughts on the Growth trade, which has been outperforming again, and note that it is not a clear-cut call.

The big things you need to know:First, we run through our thoughts on last week’s choppy price action in the S&P 500 and reiterate our 7,750 12-month-forward S&P 500 price target.Second, we update the stats we’re tracking for 4Q25 reporting season, which generally bounced back in our latest update but remain weaker than what we’ve seen in past reporting seasons.

The big things you need to know:First, the various earnings stats we track point to a sleepy start to reporting season, suggesting to us that geopolitics hasn’t been the only thing contributing to the US equity market’s recent gyrations. These stats also highlight how the mega cap growth trade has seen its dominance on the earnings front erode in some ways, helping fuel the rotation trade to Value and Small Caps.Second, our review of this past week’s earnings call commentary suggests that views of the macro have been mixed, with geopolitical concerns and consumer pressures noted, but tariffs described as manageable.Third, things that jump out from our other updates include the rise in the Russell 2000’s P/Es which are approaching 2024 highs