Thursday night, a post was stuck on this blog about what the markets are telling us about the Presidential election. The price action in both the SP 500 and the Treasury market is indicative of a Trump victory, but Fed liquidity is distorting the landscape too. Corporate credit spreads continue to act very well.
Regarding SP 500 earnings, the forward revisions continue to look very good.
Forward SP 500 Earnings Curve:
Note the “4-week rate of change”.
Next 4 Quarter’s Revisions:
This is a peek at the next 4 quarter’s EPS and revenue revisions for the SP 500.
It tracks y/y growth on a weekly basis.
Look at the steady improvement in all the metrics.
Refinitiv gives you all this data, but you have to repackage it to get it to tell you something meaningful.
I’m paying attention to Q1 ’21 expected EPS and revenue growth since by that time – if there is a Biden / Harris Administration, the policies will have been floated and the expected increase in the tax rates will have been vetted thus some of the new policy changes will start to show up in the numbers.
Bespoke Chart on Guidance:
Hard to argue with this Bespoke chart.
Summary / conclusion: It feels like a broken record every week, but the SP 500 EPS and revenue revisions are supportive of this market.
Corporate credit spreads too.
Nothing has really changed in the last 6.5 months.
More to come this weekend. Financial’s continue to look quite good and the sector has dramatically underperformed this year.
Take everything you read here with a substantial grain of salt. Do your own homework.
Thanks for reading.