4Q22 EPS misses are punished far less (-1%) vs 3Q21-3Q22 avg (-2% to -3%) suggesting lots priced in. YTD equity gains >5% (day 25) signal gains into YE (16 of 17 times) median gain 26% since 1950.

Half-full has been a better strategy YTD than Half-empty

Stocks have been soft over the past week as markets debate the trajectory of inflationary pressures, particularly wages. But even as Fed/inflation narrative is debated, since the start of 2023, the S&P 500 is up >8%, something that has happened only 4 times since 1950. And there are only 17 instances (of 73 years) where YTD gains thru 25 trading days are >5%. These are shown below:

Of the 17 instances, markets gain from day 26 to YE 16 of 17 timesMedian full year gain is +26%, with median gains day 26 to YE of +16%This implies S&P 500 is ~4,800 by YE, inline with our target and far higher than Street Consensus of 4,000. In other words, it will be an "exception" if equity markets weaken There are those who say earnings are the next "shoe to drop" but EPS estimates been falling for many months already. So, what arguably matters more is how are stocks reacting to EPS results.As our Quant Strategist Adam Gould notes, companies missing results in 4Q22 are falling ~1%, compared to an average decline of -2.5% to -3.0% seen 3Q21 to 3Q22. So investors are punishing misses to a far less extent.The two best performing sectors YTD, Comm Services (+17%) and Discretionary (+16%) have the largest negative revisions into 4Q...
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