{"id":13266,"date":"2022-08-12T14:08:48","date_gmt":"2022-08-12T20:08:48","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=13266"},"modified":"2022-08-12T14:08:48","modified_gmt":"2022-08-12T20:08:48","slug":"sp-500-earnings-update-sp-500-forward-eps-diverging-from-bullish-technicals","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=13266","title":{"rendered":"SP 500 Earnings Update: SP 500 Forward EPS Diverging from Bullish Technicals"},"content":{"rendered":"<p>The forward 4-quarter estimate (FFQE) continues to decline as of the week ending August 12, &#8217;22.<\/p>\n<p>Not what you&#8217;d expect given the rally in the SP 500 from the June 17th low of 3,636.87.<\/p>\n<p><em><strong>SP 500 data:<\/strong><\/em><\/p>\n<ul>\n<li>The forward 4-quarter estimate fell again this week to $232.93, down from last week&#8217;s $234.05, and down for the 7th consecutive week from the July 1 &#8217;22 peak of $241.22.<\/li>\n<li>The SP 500 PE ratio with the 2% rise in the benchmark this week, rose to 18.14, from 17.71 last week;<\/li>\n<li>The SP 500 earnings yield fell again to 5.51% from last week&#8217;s 5.65%, and the July 1 peak of 6.31%;<\/li>\n<\/ul>\n<p><em><strong>Annual SP 500 EPS estimate changes:\u00a0<\/strong><\/em><\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/SP500annualEPS2022202481222.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-13268\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/SP500annualEPS2022202481222-300x142.png\" alt=\"\" width=\"300\" height=\"142\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/SP500annualEPS2022202481222-300x142.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/SP500annualEPS2022202481222-150x71.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/SP500annualEPS2022202481222.png 689w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>The 2023 SP 500 estimate is down 2.75% since July 1 &#8217;22&#8217;s start, not a terrible rate of decline, but still it&#8217;s something to note.<\/p>\n<p>2024&#8217;s SP 500 EPS estimate is also is also down $7 from July 1&#8217;s start, but it&#8217;s a smaller percentage change.<\/p>\n<p><em><strong>Current quarter&#8217;s EPS and revenue growth rates seeing higher revisions:\u00a0<\/strong><\/em><\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Sp500expEPSrevgrorates81222-1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-13271\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Sp500expEPSrevgrorates81222-1-300x59.png\" alt=\"\" width=\"300\" height=\"59\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Sp500expEPSrevgrorates81222-1-300x59.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Sp500expEPSrevgrorates81222-1-1024x201.png 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Sp500expEPSrevgrorates81222-1-150x29.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Sp500expEPSrevgrorates81222-1-768x151.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Sp500expEPSrevgrorates81222-1.png 1236w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p>If you look at this table, it shows you why Wall Street commentary is so much hot air. The Q2 &#8217;22 EPS and revenue results are pretty good (shaded areas) and seeing higher revisions to growth rates since the quarter started July 1, but analysts who were bearish this quarter&#8217;s results, are now saying &#8220;wait till next quarter&#8221;, much like they said last quarter.<\/p>\n<p>The expected SP 500 EPS and revenue growth rates for the rest of 2022 and 2023 are still declining.<\/p>\n<p><em><strong>The bullish angle:\u00a0<\/strong><\/em><\/p>\n<p>The fact is market internals and the fact that sentiment got so bad in late June, early July &#8217;22, it was as bad as 2008, have been flashing bullish for the last 6 &#8211; 8 weeks.<\/p>\n<p>Here&#8217;s a few Bespoke graphs from today&#8217;s missive:<\/p>\n<p><strong><em>Market breadth remains a positive:\u00a0<\/em><\/strong><\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/bespokemarketbreadth81222.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-13273\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/bespokemarketbreadth81222-300x88.jpg\" alt=\"\" width=\"300\" height=\"88\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/bespokemarketbreadth81222-300x88.jpg 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/bespokemarketbreadth81222-1024x300.jpg 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/bespokemarketbreadth81222-150x44.jpg 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/bespokemarketbreadth81222-768x225.jpg 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/bespokemarketbreadth81222-1536x450.jpg 1536w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/bespokemarketbreadth81222-1600x468.jpg 1600w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/bespokemarketbreadth81222.jpg 1845w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p><em><strong>The June 16 &#8211; 17th low in the SP 500 was significant:\u00a0<\/strong><\/em><\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Bespokeofstocksabove50200dmas81222.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-13274\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Bespokeofstocksabove50200dmas81222-300x76.jpg\" alt=\"\" width=\"300\" height=\"76\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Bespokeofstocksabove50200dmas81222-300x76.jpg 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Bespokeofstocksabove50200dmas81222-1024x260.jpg 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Bespokeofstocksabove50200dmas81222-150x38.jpg 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Bespokeofstocksabove50200dmas81222-768x195.jpg 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Bespokeofstocksabove50200dmas81222-1536x390.jpg 1536w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Bespokeofstocksabove50200dmas81222-1600x406.jpg 1600w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/Bespokeofstocksabove50200dmas81222.jpg 1876w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p><em><strong>Cumulative Advance \/ Decline w Price 5% below prior highs:\u00a0<\/strong><\/em><\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/besokecumulateADwprice5below81222.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-13275\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/besokecumulateADwprice5below81222-300x126.jpg\" alt=\"\" width=\"300\" height=\"126\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/besokecumulateADwprice5below81222-300x126.jpg 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/besokecumulateADwprice5below81222-1024x430.jpg 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/besokecumulateADwprice5below81222-150x63.jpg 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/besokecumulateADwprice5below81222-768x323.jpg 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/besokecumulateADwprice5below81222-1536x645.jpg 1536w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/besokecumulateADwprice5below81222-1600x672.jpg 1600w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/08\/besokecumulateADwprice5below81222.jpg 1880w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>My own two cents on the last table of Bespoke&#8217;s it still indicates we reside in a &#8220;post-2008&#8221; world, where every recession seems to trigger popular sentiment looking for a 50% correction. CNBC has trotted out a few talking heads this year who have called for 50% declines in the SP 500, even though that severe of a decline only occurred once between 1945 and 1999, (and that was 1972 &#8211; 1973) in the post WW II bull market. Investors saw two 50% declines in the SP 500 from 2000 to 2009, for two completely different reasons (tech valuations and housing credit) which was like getting hit by lightning twice in a day.<\/p>\n<p>(Click on each of the Bespoke graphs to read Bespoke&#8217;s detail and explanation).<\/p>\n<p><em><strong>Summary \/ conclusion:<\/strong><\/em> No question the falling SP 500 forward estimates is more than a little worrisome, but the bullish technicals like advance \/ decline and the continued horrid sentiment is keeping me in the middle in terms of client portfolio construction. Not one comment on <a href=\"https:\/\/fundamentalis.com\/?p=13255\">last week&#8217;s SP 500 earnings update blog post<\/a> where it was noted that the June 16 &#8211; 17th lows in the SP 500, were actually accompanied by &#8220;peak&#8221; SP 500 EPS estimates and a peak Treasury yield near 3.5%. Instead, readers wanted to argue about technicals vs fundamentals.<\/p>\n<p>This market and the sentiment and the CNBC \/ Bloomie guests remind me of the summer of 2020, (just after Covid) when everyone seemed bearish but the underlying market factors were very bullish.<\/p>\n<p>The September &#8217;22 jobs report and inflation data will be very important, and the next FOMC meeting isn&#8217;t until later in September.<\/p>\n<p>Even today, with 30 minutes left in trading, all the major indices are up over 1% and high yield credit spreads are up (again). High yield credit has been flashing green, and like in late 2007 and early 2008, you don&#8217;t want to ignore credit spreads.<\/p>\n<p>We get big-box retail earnings next week. Walmart and Target have internal inventory issues. The key is to watch revenue guidance.<\/p>\n<p>Out for the weekend, might have a late Sunday or early Monday post.<\/p>\n<p>Thanks for reading.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The forward 4-quarter estimate (FFQE) continues to decline as of the week ending August 12, &#8217;22. Not what you&#8217;d expect&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":[244,91,4],"tags":[],"class_list":["post-13266","post","type-post","status-publish","format-standard","hentry","category-high-yield-credit","category-weekly-earnings-update","category-wmt"],"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\/13266","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=13266"}],"version-history":[{"count":6,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/13266\/revisions"}],"predecessor-version":[{"id":13278,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/13266\/revisions\/13278"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}