|Period||S&P 500 Total|
Source: Refinitiv IBES
Thanks to Tajinder Dhillon, part of David Aurelio’s team at Refinitiv IBES, the old Thomson Reuters Financial and Data Group, this blog got a look at historic “annual” revenue growth for the SP 500 since 2012. (See attached table. For some strange reason, Refinitiv doesn’t have annual SP 500 revenue growth back further than that.)
Readers can see that 2018 will be strongest year of annual revenue growth of the past 7 years.
2019 is expected to see slower revenue growth, but still positive.
In 2014, 2015 that drop from +3% to -3%, was likely due to Energy and the stronger US dollar. It was in late August, 2014, that crude oil started to become unglued, tumbling from $90 to $28 by late January ’16.
For some reason, it caused a spike in the US dollar from October ’14, to March ’15, one of the most rapid periods of dollar strengthening for a 6-month period ever.
The dollar has been well bid in 2018 despite the equity market weakness of late. Crude oil has been soft too. I haven’t figured out the relationship there i.e. every time crude oil starts to weaken, the dollar seems to firm, or if there is even “causality” present between the two assets.
Summary: given the strength in SP 500 revenue growth, still much stronger than the period from 2010 through 2016, I dont think this volatility we are seeing is SP 500 earnings or revenue related.
However, take all opinions with a grain of salt.
2019 has been expected to be slower for a while – the consensus estimates for 2019 have been looking for 10% earnings growth for the SP 500 for the last 12 months.
Just putting the data out there – writing helps me think through the issues. It also eases market-related anxiety.
Thanks for reading.