Today is the first day the S&P 500 has been led by cyclically-sensitive sectors since the coronavirus-led pullback occurred on 1/24. Over the past few days, we stressed the unsustainability of new highs in the SPX based on defensive sector leadership. The last time this
Last week, we explained the importance of cyclical sector leadership for the health of any bull market. We noted that gains last week came on defensive sector leadership, which casts doubt on the sustainability of new highs. We wouldn’t add broad equity exposure until cyclical
Our note from January 17 (the S&P 500 made a record high later that day) and January 23 suggested the increased probability for a 2-4% pullback in the SPX based on decelerating price trends and elevated bullish sentiment. The SPX declined ~3.2% (fits neatly into
The S&P 500 made new highs last June and July on defensive sector leadership. At the time, we cautioned readers about the sustainability of new highs built on defensive sector leadership.
Consensus expectations into Q4 SPX earnings were too negative and have undergone a 2% upside revision. Revenue and net income growth have been better than feared, especially in Tech and Communication Services. We think Q4 is the inflection point and expect 2020 SPX estimates will
We’re nearly halfway through S&P 500 Q4 earnings season with the blended earnings growth rate (actual results mixed with still-to-come consensus estimates) now standing at +0.14%. Consensus expectations coming into Q4 earnings season was for a decline of -2.0%.
While the current coronavirus outbreak continues to dominate headlines, it’s important to keep the pre-existing theme in mind, which included a global economy free of last year’s trade drags and ample policy stimulus. This outbreak may prove to be more economically damaging to China than
Cyclical sector performance divergence (mostly semiconductors) in early August had us writing about the potential for a US-China trade détente and improving global growth 3-6 months forward. Official manufacturing PMI data for July had just been released and aggregate global manufacturing PMI had just reached
US equities are lower this morning following steep declines in Asia. Most sectors retreat led by Communications Services (FB post-earnings), Materials (IP post-earnings) and Health Care (med tech), while Staples and Utilities advance.
The 2020 presidential election is often mentioned as a risk factor for equities. Of the most frequently cited risk factors, we had it ranked third behind: 1) an abrupt end the US-China trade détente based on possible Congressional sanctions on China related to Hong Kong
