Earlier this week, the sharp rise in US bond yields almost impacted all stocks except for others.$NVIDIA (NVDA.US)$It remains to be seen whether the market will erupt in strong concerns due to worries about the soaring government deficit, but perhaps the release of a large number of corporate financial reports can help divert attention from such concerns.

Since the outbreak of the COVID-19 pandemic, the market has been struggling to determine the specific position of the US economy in the business cycle, making it difficult to decide which type of stocks to choose. If the Fed's rate cuts indicate an impending economic slowdown or recession, then high-quality stocks are typically the ideal choice; but if this is a sign of market confidence about to explode, then small cap stocks and value stocks that have been hit hard may be more meaningful.

The strategic analysts at Citibank have put forward a new theory - the 'non-cyclical' theory.

In contrast, the Citibank team has identified a series of contradictions in economic data. For example, the leading economic indicators of the World Federation of Major Companies continue to point to a recession that has not yet occurred, while at the same time, a survey conducted by senior lending officials at the Federal Reserve shows that loan standards have peaked and are now tending to loosen. The US unemployment rate is low, the employment numbers are healthy, but the number of full-time jobs is decreasing. There are many such situations.

Strategists led by Scott Chronert said: 'After the outbreak of the pandemic, economic recession, supply chain disruptions leading to inflation, and the Fed's aggressive rate hikes, our economic system is still normalizing. Although inflation is currently receding, price levels should still be higher than before the pandemic, putting pressure on wage growth and economic expansion.'

They added: "We believe that there are no two identical economic, Federal Reserve, or market cycles, and the current market operation has its own unique dynamics at play."

So what does this mean for the stock market? The situation is quite complex - the institution is still bullish on US stocks, but strategists are concerned about corporate profits.

Citigroup analysts wrote: "Despite the Fed's policy shift process, the fundamentals are being affected by sustained inflation, so the bigger issue ahead may be whether corporate profit growth can be sustained beyond next year."$Qualcomm (QCOM.US)$Citibank analysts prefer companies with positive trends in stock return ratios, a trend that should be driven by operation rather than buybacks. Analysts indicate that the performance of these companies has only a slight correlation with other factors (such as quality or value), and almost no correlation with changes in economic conditions.

Citibank analysts prefer companies with positive trends in stock return ratios, a trend that should be driven by operation rather than buybacks. Analysts indicate that the performance of these companies has only a slight correlation with other factors (such as quality or value), and almost no correlation with changes in economic conditions.

Editor/rice