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Michael Cembalest, the chairman of Market and Investment Strategy for J.P. Morgan Asset Management, is providing some important guideposts that will allow investors to gauge when equity markets have bottomed.

In the most recent edition of his popular Eye on the Market report, he notes that U.S. purchasing managers indices (PMIs) have been the best leading indicators, and that equity markets are unlikely to rally sustainably until PMIs hit bottom. These benchmarks collect executive survey results from prominent manufacturing and services companies to gauge overall business activity, hiring and inventories.

The ISM manufacturing survey for June will be released on July 1st. Consensus economist expectations are for a reading of 54.5 where 50.0 indicates no change from the previous month.

Mr. Cembalest is also watching U.S. Treasury yields closely. In the past three market cycles, bond yields headed lower long before stocks hit the bottom. “A sign that the PMI index has bottomed out and that Treasury yields have peaked would be a good sign for investors, even as economic data are still deteriorating,” he said.

The strategist sees plenty of evidence for investor capitulation, a trend that may indicate a durable market trough is near. He notes that the number of companies trading with stock prices representing less than the value of cash on their balance sheets have spiked to almost 12 per cent, the biggest number since 1990.

We all know that it’s a bad idea to try and time the market. On the other hand, it is understandable if investors are reluctant to commit their savings to a market that is falling quickly. Mr. Cembalest has provided some really good thoughts on how to minimize portfolio-related anxiety.

-- Scott Barlow, Globe and Mail market strategist

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Stocks to ponder

Aritzia Inc. (ATZ-T) Shares in the fashion retailer peaked at a record high in January but have been in a downtrend since. The company is set to report its quarterly earnings results at the beginning of July, and it may be another challenging quarter given continued supply chain disruptions, rising costs and store closures. But the share price has recently stabilized in the mid-$30′s and a buying opportunity may be nearing. Jennifer Dowty looks at the investment case.

The Rundown

Inflation fears have clobbered consumer stocks. Is it time to go bargain hunting?

Forget tech stocks, the consumer sector has been the main clearing house for investor hopes and fears about inflation, interest rates, and the economy. Consumer discretionary stocks, specifically, have the worst returns of any S&P 500 sector, with year-to-date losses sitting at 29 per cent. The same sector in Canada is down by 15 per cent since the start of the year – badly trailing the S&P/TSX Composite Index, which has declined by 9 per cent. Tim Shufelt looks at the contrarian case for buying them while they’re down.

Buying the bear? Equity demand endured market pain

You’d be forgiven for thinking the worst two-quarter period for stock markets since 2009 had investors running for the hills - but you’d be wrong. One of the most startling statistics from the torrid first half of 2022 is that investors bought a net $195 billion of stocks even as major U.S. and global equity indices lost almost a fifth of their value in the face of rising inflation, interest rates and recession fears. Mike Dolan of Reuters explains why.

Also see: Latest U.S. stocks bounce tests skepticism that rally can last

Easing COVID-19 rules, growth focus aid China bulls’ cautious return

The latest easing of coronavirus travel rules combined with other encouraging policy signals have began luring some foreign investors back to Chinese stocks, raising the chances that the market can sustain its bounce after months of heavy selling.

As stocks nosedive, don’t lose sight of the difference between price and value

When stock market prices are rising, many investors are comfortable thinking about the intrinsic value of their investments. But when prices fall dramatically, fear causes us to focus only on recent stock prices. Investment manager Biff Matthews explains why those investors who can focus on economic value rather than price will be handsomely rewarded – over time.

Why the outlook for stocks, bonds and real estate markets has rarely looked this bleak

Sir John Templeton has famously said that the four most dangerous words in the world are “this time it’s different.” But this time, in Dr. George Athanassakos’ opinion, is indeed different. He believes that years of excesses at all levels governments and in both the professional and retail investment community have built pressure to a dormant volcano that it is now ready to explode, leading to the mother of all busts. The value professor explains his views, and our readers chime in.

How a massive options trade by a JP Morgan fund can move markets

A nearly $17 billion JP Morgan fund is expected to reset its options positions on Thursday, potentially adding to equity volatility at the end of a dismal first half for stocks. Analysts say the JPMorgan Hedged Equity Fund’s reset roiled markets in the closing hours of the last quarter and has the potential to move markets again this time around. Here is what you need to know.

Hedge funds turn tail as commodities crumble on recession rumble

Buy and hold, maximum long. That has basically been the strategy for commodity hedge funds for the last couple of years, but it is fast losing its lustre. Jamie McGeever of Reuters explains.

Markets challenge Fed timeline, threatening more swings in Treasuries

Bond traders expect the gyrations convulsing U.S. Treasuries to continue in the second half of 2022 as investors challenge the U.S. Federal Reserve’s projections for how far it will tighten monetary policy to quell the worst inflation in decades.

Others (for subscribers)

Number Cruncher: Nine undervalued stocks with strong growth potential

Wednesday’s analyst upgrades and downgrades

Tuesday’s analyst upgrades and downgrades

Globe Advisor

A stronger U.S. dollar might hit emerging economies harder this cycle

Rise of ETFs ‘destabilizing’ emerging markets

How advisors are guiding younger investors through the market downturn

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Ask Globe Investor

Question: Labrador Iron Ore Royalty Corp. (LIF-T) has had some wild swings in its quarterly dividend the last six quarters. It shows a three-year dividend growth rate of 69 per cent and a five-year dividend growth rate of 37 per cent on some websites. Do you know the reasons for these swings and are those growth rates (or anything even close to them) sustainable? - Franz S.

Answer: LIF has been extremely volatile, and the main reason is that its profitability is mainly dependent on iron ore prices. They have been weak recently and the company’s first quarter financials were poor. As a result, LIF slashed its March dividend to $0.50 from $1.15 in December. The company recently announced that its next dividend, payable in late July for shareholders of record on June 30, will be $0.90. With quarterly fluctuations of that magnitude, it’s clear you cannot project future dividend growth on the basis of past results.

--Gordon Pape

What’s up in the days ahead

Have investors become too bearish on Canadian oil and banking stocks? Tim Shufelt and David Berman will take a look.

Click here to see the Globe Investor earnings and economic news calendar.

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Compiled by Globe Investor Staff