Indiana Trust Wealth Management
Investment Advisory Services
by Clayton T. Bill, CFA
Vice President, Director of Investment Advisory Services

  • The US equity market, represented by the S&P 500 index, rose 1%.
  • The stock market is well into earnings season. Profits look good, and homebuilders are seeing demand growth into April.

With all the focus in the financial press upon the Federal Reserve, inflation, and turmoil in the banking system, it would be easy to forget that what ultimately counts for stock market investors is corporate earnings growth. Profits are what matter.

The stock market is now well into earnings season, the weeks after the calendar year quarter-ends when companies report their “numbers”. Generally, earnings have been quite good so far in 2023. Microsoft and Meta (Facebook) reported solid profits, and mega-cap tech has been rallying as a result.

Last week, we highlighted homebuilder stocks’ strong performance this year. Housing is often viewed as a leading indicator for economic activity. This week, the big homebuilders reported earnings for the first quarter. Here are a few select quotes from their earnings calls with senior management, courtesy of Renaissance Macro Research:

  • PulteGroup Inc.: "We're seeing some nice momentum on the sales floor. And I think you've heard from us, we've seen that continue into April. And that's allowed us to be optimistic and bullish with our forward start projections."
  • Taylor Morrison Home Corp.: “Momentum has carried through the first three weeks of April ... leading indicators—including sales traffic, mortgage pre-qualifications and digital home reservations ... point to continued strength."

It does not appear that a sudden stop in economic activity is in the cards for the next few quarters. Aggregate corporate earnings are beginning to show some promise for the rest of 2023.

In the meantime, professional fund managers have not been so bearish on equity positioning since March 2009 based upon allocations of stocks relative to bonds:












Fund manager positioning reflects the consensus that the US will enter a recession this year, with the Fed’s interest rate hiking as the proximate cause. Higher rates have not done the trick, so far. Should economic momentum continue, those recession calls could soon begin to be pushed out to 2024 and fund managers may begin to rethink their bearish positioning.  


IMPORTANT DISCLOSURES: All info contained herein is solely for general informational purposes. It does not take into account all the circumstances of each investor and is not to be construed as legal, accounting, investment, or other professional advice. The author(s) and publisher, accordingly, assume no liability whatsoever in connection with the use of this material or action taken in reliance thereon. All reasonable efforts have been made to ensure this material is correct at the time of publication.  Copyright Indiana Trust Wealth Management 2023.