New Observations from the broad-based S&P 1500 ERM review My latest review shows that the healing process that began in earnest last month, continues to increase every week. I cannot overstate how BULLISH this is and would completely disagree with the bears, who claim ongoing rally is not justified. In comparable major earnings revisions bottoming periods, post-Tech Wreck in 3/03 and post Great Financial Crisis in 3/09, my work looked very similar and also supported these rallies that followed their respective major bear markets lows. On market cap size, earnings revisions model (ERM) still remain best within Large Caps (S&P 500) and are followed then by Midcaps (S&P 400). The weakest relative revisions are within the S&P 600 Small Cap index. There are two main areas of favorable readings: One is dominated by Secular Growth/FAANG and the other is the Value/Cyclicals (and as my colleague Tom Lee refers to as “Epicenter” stocks). Clearly, the number of favorable readings in traditional defensive areas of Staples, Utilities, legacy Telecom, and Real Estate are less represented.I have high conviction that our proprietary methodology will continue to be extremely valuable for the remainder of the year by highlighting the best stocks to own. How will the ERM model using earnings revisions help going forward as things move from crisis to recovery? It is my expectation that this period of “less bad” will remain in place for the next 4-12 weeks, and importantly I will be on the lookout for names that have their earnings revisions flip from “still falling, but less bad” to double plus, or “positive and improving.” In addition, I expect in July/August that companies’ analyst EPS estimates will reach a maximum rate of pessimistic profit changes but then start to get smaller. This should continue to underpin our constructive outlook for U.S. equities. That said, I want to be clear that we are STILL expecting absolute EPS numbers to be lowered for at least another two to three months. However, our key proprietary revision indicators should continue looking less bad and start moving towards outright good. This will be critical, and, if we are right the backdrop for equities will stay constructive for the remainder of 2020 and beyond. Stay tuned.