{"id":10014,"date":"2020-03-27T21:46:49","date_gmt":"2020-03-27T21:46:49","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=10014"},"modified":"2020-03-27T21:46:49","modified_gmt":"2020-03-27T21:46:49","slug":"sp-500-earnings-companies-hiring-surprise-and-sp-500-sectors-as-of-market-cap","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=10014","title":{"rendered":"SP 500 Earnings, Companies Hiring (Surprise!) and SP 500 Sectors as % of Market Cap"},"content":{"rendered":"<p>Amid all the doom and gloom, here are the companies that have announced that they will looking to add to their workforce in the coming months:<\/p>\n<ul>\n<li><em><strong>Walmart:<\/strong> <\/em>150,000 workers to be hired<\/li>\n<li><em><strong>Pepsi:<\/strong><\/em> 15,000 addi&#8217;l workers to be hired<\/li>\n<li><em><strong>PapaJohn&#8217;s:<\/strong><\/em> 20,000 workers to be hired<\/li>\n<li><em><strong>CVS:<\/strong><\/em> 50,000 workers to be hired<\/li>\n<li><em><strong>Dollar General:<\/strong><\/em> 143,000 workers to be hired<\/li>\n<li><em><strong>PizzaHut:<\/strong><\/em> 30,000 workers to be hired<\/li>\n<li><em><strong>Oreo:<\/strong><\/em> 1,000 workers<\/li>\n<li><em><strong>Honeywell:<\/strong><\/em> 500 workers to be hired<\/li>\n<\/ul>\n<p>This list is by no means comprehensive or scientific. A list was kept on my desk as I read the wires on Briefing.com or heard the headline on CNBC.<\/p>\n<p>Not all the news is grim.<\/p>\n<p>&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;-<\/p>\n<p>Of the 11 sectors of the SP 500, here is the sector ranking from highest to lowest as a percentage of the SP 500 market cap (as of Thursday, 3\/26\/20):<\/p>\n<ul>\n<li><em><strong>Tech:<\/strong><\/em> 25.7%<\/li>\n<li><em><strong>H\/Care:<\/strong><\/em> 15%<\/li>\n<li><em><strong>Financials:<\/strong> <\/em>11.7%<\/li>\n<li><em><strong>Comm Serv:<\/strong> <\/em>10.7%<\/li>\n<li><em><strong>Cons Discr:<\/strong> <\/em>9.9%<\/li>\n<li><em><strong>Industrials:<\/strong><\/em> 8.4%<\/li>\n<li><em><strong>Cons Spls:<\/strong><\/em> 7.6%<\/li>\n<li><em><strong>Ute&#8217;s:<\/strong> <\/em>3.5%<\/li>\n<li><em><strong>Real Estate:<\/strong><\/em> 3%<\/li>\n<li><em><strong>Energy:<\/strong><\/em> 2.7%<\/li>\n<li><em><strong>Basic Mat:<\/strong><\/em> 2.4%<\/li>\n<li>SP 500: 100%<\/li>\n<\/ul>\n<p>The top 3 sectors are 53% of the SP 500 by market cap, while the bottom 4 sectors are 11%. The top 5 sectors today are roughly 75% of the SP 500&#8217;s market cap.<\/p>\n<p>Source: IBES by Refinitiv<\/p>\n<p>Here is the <em><strong>ranking in mid-February &#8217;20<\/strong> <\/em>near the peak of the SP 500:<\/p>\n<ul>\n<li><em><strong>Tech:<\/strong><\/em> 24.6%<\/li>\n<li><em><strong>H\/Care:<\/strong><\/em>\u00a013.8%<\/li>\n<li><em><strong>Financials:<\/strong><\/em>15.3%<\/li>\n<li><em><strong>Comm Serv:<\/strong> <\/em>10.5%<\/li>\n<li><em><strong>Cons Discr:<\/strong> <\/em>9.9%<\/li>\n<li><em><strong>Industrials:<\/strong><\/em>\u00a09.0%<\/li>\n<li><em><strong>Cons Spls:<\/strong><\/em> 7.1%<\/li>\n<li><em><strong>Ute&#8217;s:<\/strong> <\/em>3.4%<\/li>\n<li><em><strong>Real Estate:<\/strong><\/em> 3%<\/li>\n<li><em><strong>Energy:<\/strong><\/em>\u00a03.8%<\/li>\n<li><em><strong>Basic Mat:<\/strong><\/em> 2.5%<\/li>\n<li>SP 500: 100%<\/li>\n<\/ul>\n<p>No question, the Financial sector has had the biggest loss of SP 500 market cap over the last 6 weeks.<\/p>\n<p><em><strong>SP 500 Earnings<\/strong><\/em>\u00a0<em><strong>Update:<\/strong><\/em> (Source: IBES by Refinitiv)<\/p>\n<ul>\n<li><em><strong>Fwd 4-qtr est: <\/strong><\/em>$162.51 vs last week&#8217;s $168.25<\/li>\n<li><em><strong>Rate of change: <\/strong><\/em>-2.81% vs +0.50 basis points last week<\/li>\n<li><em><strong>PE ratio: <\/strong><\/em>15.6x<\/li>\n<li><em><strong>Fwd SP 500 earnings yield: <\/strong><\/em>6.39% vs last week&#8217;s 7.30%<\/li>\n<\/ul>\n<p>This was the week where SP 500 earnings reality caught up with what everyone was expecting as &#8220;expected&#8221; 2020 SP 500 EPS is now below the expected $163 &#8211; $164 EPS for 2019.<\/p>\n<p>SP earnings are now officially &#8220;negative&#8221; in terms of expected growth for 2020.<\/p>\n<p>Here is a table from the earnings spreadsheet that shows the &#8220;bottom-up&#8221; estimate for the SP 500&#8217;s 2020 EPS (updated weekly)<\/p>\n<figure id=\"attachment_10019\" aria-describedby=\"caption-attachment-10019\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/fundamentalis.com\/?attachment_id=10019\" rel=\"attachment wp-att-10019\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-10019\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2020bottomupests32720-300x24.png\" alt=\"\" width=\"300\" height=\"24\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2020bottomupests32720-300x24.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2020bottomupests32720-768x60.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2020bottomupests32720-1024x81.png 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2020bottomupests32720.png 1308w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-10019\" class=\"wp-caption-text\">click to open<\/figcaption><\/figure>\n<p>The 2nd quarter 2020 (as you&#8217;d expect) is seeing the sharpest cuts to the number.<\/p>\n<p>The 3rd and 4th quarter is still holding up relatively better in terms of negative revisions, which supports the notion that by May &#8211; June &#8217;20 the US economy could start to recover.<\/p>\n<p>Hope readers find that helpful.<\/p>\n<p>2020 SP 500 &#8216;expected&#8221; EPS growth is now negative by -0.5%, and this will likely get worse.<\/p>\n<p>The final calendar 2019 SP 500 EPS &#8220;actual&#8221; will be published Wednesday. It should come in around $163 &#8211; $164.<\/p>\n<p>Walgreens (WBA) is the sole company of interest (to me) reporting this coming week.<\/p>\n<p><em><strong>Summary \/ conclusion: <\/strong><\/em>By the numbers, those compiling or constructing SP 500 estimates are still expecting a stronger 2nd half to 2020. Q1 &#8217;20 numbers will likely be tough and the Q2 &#8217;20 guidance will be horrid. Thus watching Q3 and Q4 &#8217;20 numbers will provide some insight to investors but it will have to be digested in light of the headlines around the virus.<\/p>\n<p>The sector weights as a percentage of the SP 500 market cap is fascinating. Technology&#8217;s relative performance has actually been decent, with the QQQ&#8217;s returning -10% as of last night, versus the -21% SPY return. Investors are getting good &#8220;alpha&#8221; by holding large-cap tech.<\/p>\n<p>CNBC was reporting Friday night, of numerous insiders buying shares at JP Morgan. The stock is down from $141 to low $90&#8217;s in this drawdown.<\/p>\n<p>Take all of this as one opinion. In this kind of environment, circumstances change quickly. Take all opinions with a healthy dose of skepticism.<\/p>\n<p>Some high-yield ETF&#8217;s (HYG) were added today for clients in small amounts as the Fed seems to want to backstop everything. Here was an <a href=\"https:\/\/fundamentalis.com\/?p=10002\">article published last night<\/a> by this blog thinking that maybe a bottom will be found by the SP 500 in the next 4 &#8211; 6 weeks. Adding some HYG was a way for me to get decent yield for clients i.e. +5% in the HYG &#8211; with some risk-adjusted equity-like return.<\/p>\n<p>I do think the Fed wants the bond markets functioning properly.<\/p>\n<p>Here are the three SP 500 technical levels being watched for a successful retest of SP 500 lows in the next month:<\/p>\n<ul>\n<li>2,346.58 &#8211; December &#8217;18 low<\/li>\n<li>2,191.86 &#8211; Low for this drawdown made March 23rd, 2020.<\/li>\n<\/ul>\n<p>A close below those levels is not good.<\/p>\n<p>Thanks for reading.<\/p>\n<p>More coming this weekend.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Amid all the doom and gloom, here are the companies that have announced that they will looking to add to&hellip;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[193,84,27,194,191,235],"tags":[],"class_list":["post-10014","post","type-post","status-publish","format-standard","hentry","category-corporate-high-yield","category-financial-sector","category-jpm","category-market-cap-weights","category-qqq","category-wba"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/10014","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10014"}],"version-history":[{"count":10,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/10014\/revisions"}],"predecessor-version":[{"id":10026,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/10014\/revisions\/10026"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10014"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10014"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10014"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}