Jurrien Timmer, Director of Global Macro at Fidelity, analyzes corporate earnings trajectory and macroeconomic resilience with Alex Lieberman.
Prediction Held up
Timmer: Equity rally driven by P/E expansion is ending
“If that earnings pivot comes and that earnings recovery happens, then the market can continue to advance on the basis of rising earnings, but the phase where it rises purely on the P.E. Going up, that, I think, is, is now ending, and I think, you know, in the …”
Opinion
Timmer: Stock market pivoted to betting on soft landing and earnings recovery
“For the stock market, I think there has been a pivot away from the interest rate narrative towards the soft landing earnings recovery narrative and that's what the market is betting on”
Prediction Not checkable as stated
Timmer: Bonds Will Hedge Volatility Better in a 2024 Recession
“If we do get a recession down the road sometime in 2024, Then you would think that bonds will do what they normally do, which is to protect investors from volatility, and again, last year, bonds were in the eye of the volatility storm, but now that yields are …”
Insight
Timmer: Full Fed hiking cycles typically span 5 to 6 percentage points
“So the full cycle tends to be five, six percentage points from two to three below what we would consider a neutral rate, which is generally thought of as about three and a half percent or so, to about two to three percentage points above.”
Prediction Not checkable as stated
Timmer: Dropping Inflation From 3% to 2% Will Be Harder
“I think the lifting will be a little heavier going forward because what we call the base effects, you know, that rate of change calculation where you add in the current month and you drop out the data from 12 months ago. The base effects are basically behind u…”
Insight
Timmer: Equities Typically Rally 2-3 Quarters Ahead of Earnings Bottom
“What we see typically in a market cycle is you have a cyclical bottom, and it looks like last October may have been exactly that, and then you have a recovery, an early cycle recovery based on eventually an earnings recovery, but the market discounts that. So …”