Conclusion

We will continue to monitor the data for typical recession signals from employment, consumer spending, business sentiment, Fed policy, the yield curve, inflation and global economics. Unless stronger signs of impending GDP recession appear, a serious EPS recession is unlikely. Admittedly, the atmosphere is a bit foggy right now and there may be an EPS chasm ahead of us, so caution is warranted, but not outright bearishness. Unfortunately, a strongly Bullish stance is also unlikely, as the only way prices can rise during an EPS plateau is through higher P/E ratios and it’s very difficult to make the case for a forward P/E of 18x or greater.

 

Important Disclosure

IVW, IVE, VDC, VOX, VHT, VDE,VAW and VIS have been, may be and/or are currently held in several TOPS Portfolios.

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This article provides commentary on current economic and market conditions and is not directly relevant to any particular client account. The information contained herein should not be construed as personalized investment advice or recommendations to buy or sell any security. There can be no assurance that the views and opinions expressed in this article will come to pass. Investing involves the risk of loss, including the loss of principal.

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Diversification cannot assure a profit or guarantee against a loss.

Source: Bloomberg for historic price and return references.

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