The most significant investment controversies since the Fall of 2021 have been about inflation, the changing perception about interest rates, and the Fed’s policy path. Inflation impacts corporate profitability, and our research has long shown that changes in gross margins (profitability) are statistically significantly associated with subsequent stock returns. The consumer price index has rolled
Profitability matters, and one of the most significant expenses for many companies is labor. Since COVID, labor shortages have driven enormous pay increases resulting in a material margin impediment for many companies. Union labor has caused structurally lower margins for many mature businesses for decades, and the consistent wage increases when inflation was low were
Over the last few months, we have continued to publish our thoughts on artificial intelligence and its potential impact on US equities. So far, we have established a few key conclusions from our evolving research: AI is one driver of the stock market performance this year, as AI stocks have outperformed growth stocks excluding AI.
To read Trivariate’s recent research note on Healthcare Stocks click here.
It is difficult to create an economic and corporate earnings narrative that explains the projected Fed path and recent market movement. The WIRP function on Bloomberg is the most common gauge of current interest rate perceptions. It shows that interest rates will be 25bps lower in six months, and the consensus rhetoric is that will
For net-long healthcare investors, the last few years have been a particularly challenging time. Only a quarter of healthcare stocks have beaten the market over the last two years, the lowest percent of winners in at least two decades. Over the last few months, few investors have asked us about the healthcare sector. We thought
We have put forth the idea that the Fed will be more hawkish than what is in the price, as low unemployment and high CPI will prevent an incrementally dovish stance. Following a recent round of investor meetings, we do not think we have an out-of-consensus view – at least among equity investors. The potential
To read Trivariate’s recent research note on NVDA click here.
To read Trivariate’s research note on which companies are good and bad at buying their own stock, click here.
We have mentioned several times in the last couple of months that a logical reason the market is higher YTD is that the probability and severity of a bear case in S&P500 earnings is not as high as it was at the beginning of the year. However, that is not a complete picture of the
