From Chief Investment Officer Tom Veale,
The continuing mis-match of market headlines and index movements can be confusing. That is part of the reason the Market Risk Indicator is of value – it offers an opinion-free view of market statistics relative to the financial news.
This week shows the S&P 500 rising slightly as market risk remains steady at the threshold of the “caution” territory. At this point Q1, 2023 Earnings have been coming in as acceptable. The headlines have been adding that the future comments from companies have been cautionary relative to earnings. So far it’s “earnings growth” that is expected to decline, not “earnings.” Not yet, anyway. There is still real potential for a decline in actual earnings or even losses but so far it’s not showing. Looking at transportation and energy costs we see some stability forming. That’s good news. The price and supply of energy as a component of most everything else has been steady now for some months.
The Market Risk Indicator dropped a point to 32 this week with an MRI Oscillator value of minus 1, indicating a slight decline in risk pressure. Three components dropped in risk profile while one remained unchanged. We still have one being cautionary (Relative Valuation) and one offsetting proactive (IPO/New Issues) with two neutral.