Q4 profit cycle is likely to be extended by fiscal tailwinds, says Bank of America's Chris Hyzy

Market Outlook - The market is at an all-time high due to narrow leadership, but small caps and financials have shown positive momentum since early August [2] - Any potential rate cut needs to be supported by balanced data; weak data could lead to expectations of further cuts in October [3] - The market is currently in a wait-and-see mode, anticipating balanced labor supply and demand data, with revisions expected on Tuesday [4] - The firm is bullish and plans to "buy the dip" if an opportunity arises [4] Valuation and Earnings - The concentration of market leadership is not a major concern because the earnings contribution of the leaders is equivalent to their market cap, unlike the tech bubble of 1999-2000 [5] - While further rotation could create a healthier market, annual returns may normalize compared to the double-digit returns of recent years [6] - The firm adopts an "owl market" approach, constantly seeking confirmation that profits continue to accelerate and revisions are trending upwards [7] Economic Indicators and Monetary Policy - While a 50 basis point cut in September is possible if the jobs number is bad, it is considered unlikely given solid consumer spending data from the Bank of America Institute [8] - A balanced jobs number, in line with consensus expectations, is more likely [9]