During last week’s start to 2023, I spent a good portion of my time doing my monthly deep dive into my single-stock section model, which I call ERM, for the U.S. universe. It is useful to take a step back from the macro every once in while and devote more attention to what individual names and what themes may be flashing by looking at the trees and not the entire forest. 

Since the end of 1Q22, I have been commenting that the overall S&P 500 earnings revisions as shown by my proprietary ASM indicator were falling, and this was one of the main reasons I had flipped from bullish to bearish.  Additionally, during the remainder of the year, I wrote quite a bit about how this key metric kept deteriorating, and that making a final extreme low would be an incredibly important signal that an equity market bottom was finally at or near its final trough. 

The highest-level takeaways from my earnings revisions review at the single-stock level are as follows: 

1) Earnings expectations for 2023 still look too high; and

2) The aggregate analyst community has little to no fear about any significant economic slowing in their company outlooks. 

So, how does this reconcile with investor sentiment polls that suggest “everyone” is overly bearish? ...

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