“Our view: As Q3 earnings kicks off this week, we expect a steady quarter of FFOPU growth. That said, downside risks to earnings forecasts and NAVs remain as rates continue to rise. Questions around distribution sustainability have also risen in frequency. In short, little has gone unscathed from the wrath of a higher for longer rate backdrop and elevated macro uncertainty, including our preferred picks … We expect growth leadership from seniors and industrial, aided by strength in fundamentals.
“August’s retail sales data released this morning continued to show weakening consumers, reflecting the negative effects of rising prices and the interest rate shock on household purchasing power… consumption per capita showed its biggest quarterly decline since the first pandemic-related lockdown… the Conference Board index is at levels seen only in the last two recessions.
“In last week’s note, we made the case that the odds of a 4Q rally have been reduced. Our work on narrowing breadth, cautious factor leadership, falling EPS revisions and fading consumer confidence tells a different story than the consensus call for a rally into year end that’s more centered on sentiment and seasonal tendencies … We remain focused on earnings revisions breadth which tends to have leading properties relative to dollar EPS estimates.
Source: News Formal (newsformal.com)
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