Valuation, M-PMI & Consumers

Check out the accompanying pdf and chart collection. Executive Summary: Yesterday’s M-PMI report jibed with our view that the US economy is in a growth recession with some sources of inflation abating—which is bullish for stocks. … Since we think the S&P 500 might have bottomed on June 16, we’re raising our target ranges for its price index and forward P/E multiple while keeping our earnings expectations unchanged. … Also: The recent consumer spending and saving data paint a challenging picture: The “inflation tax” has sapped consumers’ purchasing power, causing less saving and more borrowing to support essential spending. Consumer sentiment hasn’t been so negative in nine years. Nevertheless, consumers should continue to pivot from buying goods to buying services.