Research

Q4 of 2022 was the first time in over 30 years where the S&P500 was up more than 5% in a quarter and the consumer discretionary sector was down more than 10% during that same quarter.  That has powerfully reversed year-to-date, and while huge moves in AMZN and TSLA are partially responsible,  many of the

Today’s video highlights some incongruities we have observed over the last month…

Most of the news and macro commentary in the last week has been about the Fed. We have been writing since the Fall of 2021 that the perception about interest rates is statistically significantly associated with the price-to-forward earnings for the S&P500, and the relationship is even more pronounced for growth stocks. Our work shows

The range of opinions about what could happen to the US equity market expressed by investors in our recent conversations have been as wide as any time we can remember. Some investors think the Fed has been exceedingly hawkish. Some think the Fed was too late to begin raising rates but now they think accommodation

At Trivariate we regularly study corporate capital uses and evaluate management teams’ decision-making. We showed previously that buybacks have not been efficacious at predicting subsequent stock performance.  Companies doing large share repurchases have not meaningfully outperformed companies that dilute their share count on a relative-to-industry and volatility-adjusted basis. Buybacks are much more effective when companies

We wrote a note last week articulating a framework for shorting stocks.   Accruals and price momentum matter. Let us know if you want short ideas.

We thought conditions looked far worse than 3 months ago a couple of weeks ago, with valuation, speculation, interest rates, and earnings expectations the changing forces causing our negativity. But that was BEFORE SVB and tightening financial conditions.

A couple of weeks ago we wrote that “times were changing” due to a combination of rising rates and the likelihood of an incrementally hawkish Fed, excessively optimistic 2024 bottom-up earnings estimates, less compelling absolute (S&P500 multiple expanded from below 15x 2023 estimates to 18x) and relative (to short-term government bonds) valuation and increasing speculation

We have been arguing that a combination of rising rates, higher valuation, more speculation, and optimistic 2024 earnings estimates mean that the risk-reward for the S&P500 market looks worse today than it did a few months ago.  Moreover, investors are constantly asking for short ideas, flummoxed that companies with downward earnings revisions do not subsequently

In last week’s Level Set we wrote that changes over the last week to earnings expectations, the perception about interest rates, valuation, and speculation all made us more negative about the US equity market than we were three months ago. We met with dozens of investors this past week and asked in each meeting about