Hefter Report
The Hefter Report – September 2023
The US equity market remains strong. Leading the way have been the 7 largest cap companies which are benefiting from the new advances in artificial intelligence (AI). AI is not only good for technology stocks, but is also improving the efficiencies of companies in virtually every industry. These productivity gains should add to future earnings, the driving force in equity valuations. With the US being the major player in this space, capital has poured in, allowing the dollar to continuously outperform other currencies.
Read More >>The Hefter Report - July 2023
Economic activity in the first half of 2023 has remained resilient despite the Federal Reserve’s hawkish stance over the past 18 months. In our view, the risk of recession has not completely dissipated but seems to have been reduced. This is primarily due to estimated GDP growth trending at 1.7-2% for 2023, a recovery in real consumer disposable income, and stability in the housing market.
Read More >>The Hefter Report - March 2023
In our view, the risk to equities is rising and the potential reward is diminishing. The recent failure and near failure of several US and European banks indicates to us that the Fed’s persistent interest rate increases are slowing down the economy. With rates rising, inflation hovering around 6% and earnings estimates expected to ease, equity valuations look less attractive to us. Currently, the S&P 500 earnings for 2023 are expected to be around $220 per share. At this level, the index is now trading at an 18x multiple, which is high for the current economic conditions.
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