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
Higher US yields and the firmer dollar follow better than expected US economic data this morning, while overnight Q4 earnings get a mixed response. Tomorrow’s FOMC meeting generates previews mostly focused on future meetings and the complications of eventually ending current balance sheet expansion. Meanwhile… China’s
It’s still too early to judge the ultimate size and scope of the coronavirus outbreak but we’re using the 2003 SARS outbreak as a market forecasting template nonetheless. At this point, the mortality rate of the Wuhan coronavirus is much lower than
Japan flash manufacturing PMI for January improved to 49.3 from 48.4 last month and Eurozone flash manufacturing PMI improved to 47.8 from 46.8. Both numbers still indicate contraction, but both improve at a pace that’s slightly ahead past episodes of recovering global growth.
Last Friday we noted some price deceleration in the S&P 500. That trend has continued this week and comes at a time of ‘elevated’ short-term bullish sentiment in the AAII polling data. Sentiment indicators tend to be reliable contrarian indicators only at extremes.
During the last week of December we discussed our 2020 forecast, which centers on expectations for above-trend global growth sometime around mid-year. Today’s South Korea Q4 GDP beat and strong Industrial Production out of Taiwan help make the case, but our best forward-looking indicator are
