{"id":5973,"date":"2016-05-29T17:36:17","date_gmt":"2016-05-29T17:36:17","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=5973"},"modified":"2016-05-29T17:36:17","modified_gmt":"2016-05-29T17:36:17","slug":"sp-500-weekly-earnings-update-the-dollar-has-rallied-all-of-may","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=5973","title":{"rendered":"SP 500 Weekly Earnings Update: The Dollar Has Rallied All of May"},"content":{"rendered":"<p>Because the Chicago triathlon season is nearly upon us, and Chicago being a truly summer city, sometimes the Weekly Earnings Updates (during the summer months) will get posted in a sporadic fashion, over a weekend, or maybe not until Monday the following week, simply because training or competition calls.<\/p>\n<p><em><strong>Thomson Reuters data &#8220;By the Numbers&#8221;:\u00a0<\/strong><\/em><\/p>\n<ul>\n<li>Forward 4-quarter estimate: $123.26<\/li>\n<li>P\/E ratio: 17(x)<\/li>\n<li>PEG ratio: 17.7(x) and still not meaningful given the y\/y growth of the forward estimate<\/li>\n<li>SP 500 earnings yield: 5.87% , well below 6% after last week&#8217;s rally,<\/li>\n<li>Year-over-year growth of the forward estimate: +0.96% versus last week&#8217;s +0.94%<\/li>\n<\/ul>\n<p>With roughly 490 of the SP 500 having reported Q1 &#8217;16 earnings, attention now turns to the companies that will report over the next 4 weeks that have May &#8217;16 quarter&#8217;s end, which is companies like Fed-Ex, Nike, Micron, Oracle, Accenture, and a host of others.<\/p>\n<p>Broadcom (AVGO) reports this week which could be a good view into the semiconductor space. I&#8217;ve never owned or followed the company and my only semi positions today are small weighting&#8217;s in Micron and Intel but Broadcom is an Apple supplier and in the midst of a merger.<\/p>\n<p>Usually with quiet earnings weeks like this coming 4 days, the attention turns to macro since the mainstream financial media has to feed the beast with something: The dollar has now strengthened for almost the entire month of May &#8217;16 and the &#8220;grand rotation&#8221; that started earlier in the year has now stopped &#8220;rotating&#8221; (as they say).\u00a0Gold, silver, copper have now while maybe not fading from critical technical levels, have at least stopped their rapid ascension, and even crude oil after touching $50 last week, backed off from $50 later in the week.<\/p>\n<p>All the charts, including crude oil, that looked like they were primed to break above long-term downtrends, have now stopped ascending, which ( in my opinion) is coincident with the dollar strength.<\/p>\n<p>If you look at the &#8220;asset class return tables&#8221; for the last 5 years, commodities, and now Energy the last 18 months, have been at or near the bottom of the asset returns tables for those years, so I thought maybe we could be seeing a real recovery for grains, metals, and Energy \/ natural gas.<\/p>\n<p><em><strong>Summary \/ conclusion: <\/strong><\/em>My own opinion is that the SP 500 earnings eventually break out of this three-year malaise around $118 per share and resume their normal 7% &#8211; 9% annual growth, and the SP 500 will likely precede this by the SP 500 breaking out above the 2,130 &#8211; 2,135 all-time highs from the summer of 2015.<\/p>\n<p>Commodity strength would help with my confidence around this forecast since it would imply that there is some demand improvement, or some expected improvement in global growth.<\/p>\n<p>The forecast for 2016 was that the SP 500 would be up in the neighborhood of 10% for the calendar year, and the sector overweight&#8217;s were Financials and Technology.<\/p>\n<p>The long-term wealth-generation and profit-creation machine that is the US economy and the SP 500 isn&#8217;t broken, it&#8217;s just got an elephant sitting on its chest.<\/p>\n<p>However the US dollar still matters here, particularly as it pertains to SP 500 revenue growth. I&#8217;d hate to see it strengthen much more and much further in the 2nd quarter. (The UUP is short-term overbought, but on the weekly chart it is still oversold.)<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Because the Chicago triathlon season is nearly upon us, and Chicago being a truly summer city, sometimes the Weekly Earnings&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":[126,91],"tags":[],"class_list":["post-5973","post","type-post","status-publish","format-standard","hentry","category-us-dollar","category-weekly-earnings-update"],"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\/5973","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=5973"}],"version-history":[{"count":7,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/5973\/revisions"}],"predecessor-version":[{"id":5980,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/5973\/revisions\/5980"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5973"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5973"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5973"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}