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Feb 03
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$339.85
$338.83
-0.3%
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LONG
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Bob Elliott
Substack author, Nonconsensus
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Bob Elliott, a previously cautious analyst, has shifted to a bullish stance on US equities. He highlights strong underlying fundamentals: resilient consumer spending, rising business dissaving driven by AI investment, robust corporate profit growth (double-digits overall, mid-20s for tech), and all-time high margins. Despite this, US stocks have traded flat since October, lagging other asset classes, and market reactions to positive economic data and strong 4Q earnings beats (expectations rising from 8% to 12%) have been unusually subdued. Short-term analyst expectations remain stable and subdued. The significant disconnect between strong, improving fundamentals and flat, underperforming price action, coupled with low short-term expectations, creates a contrarian buying opportunity. The author explicitly states the "nonconsensus view is in favor of US equities," suggesting that the market has not yet priced in the improving conditions, setting the stage for a potential re-rating and catch-up rally. The cooling of "Mag7" and strengthening of the "broader market" points to a healthier, more sustainable rally. Long a broad US equity market ETF (e.g., VTI or ITOT) to capitalize on the improving economic and corporate fundamentals, strong earnings growth, and the potential for a significant catch-up rally as the market recognizes these unpriced positives. This is a contrarian play against recent subdued price action. A sudden deterioration in economic data, unexpected hawkish shifts in monetary or fiscal policy, a significant geopolitical event, or a failure of market sentiment to shift despite strong fundamentals. |
Nonconsensus
The Case For US Stocks
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