{"id":7803,"date":"2018-05-22T18:27:11","date_gmt":"2018-05-22T18:27:11","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=7803"},"modified":"2018-05-22T18:27:47","modified_gmt":"2018-05-22T18:27:47","slug":"is-is-1994-all-over-again","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=7803","title":{"rendered":"Is it 1994 All Over Again ?"},"content":{"rendered":"<ul>\n<li><em><strong>Fwd 4-qtr est:<\/strong><\/em> $164.11 vs last week&#8217;s $163.16<\/li>\n<li><em><strong>P.E ratio:<\/strong><\/em> 16.5x<\/li>\n<li><em><strong>PEG ratio:<\/strong><\/em> 0.76x<\/li>\n<li><em><strong>SP 500 earnings yield<\/strong><strong>:<\/strong><\/em> 6.05% vs 5.98% last week<\/li>\n<li><em><strong>Year-over-year growth of fwd est:<\/strong><\/em> +21.75% vs last week&#8217;s 20.9%<\/li>\n<\/ul>\n<p>(Source: Forward estimate from Thomson Reuters &#8220;This Week in Earnings&#8221;. The rest is internal.)<\/p>\n<p><em><strong>Commentary:<\/strong> <\/em>Training for a 1\/2 Ironman this summer took me on a 4-day bike camp late last week and through Sunday, May 20th, hence the SP 500 earnings data is a little late getting out.<\/p>\n<p>As readers can see the forward estimates move forward with an almost giddy consistency, with the y\/y growth of the forward estimate now at +21.75%.<\/p>\n<p>It is remarkable how robust the SP 500 earnings data is and yet the SP 500 is up just slightly in 2018 &#8211; what gives ?<\/p>\n<p>In 1994, the SP 500 earnings growth was 20% y\/y and the SP 500 returned just 1% that year. Why ? The Fed &#8211; and really it was Alan Greenspan &#8211; raised rates 6 times in 1994.<\/p>\n<p>This year is an almost picture-perfect copy of 1994 so far.<\/p>\n<p>The only difference was that Fed Chair Greenspan shocked everyone with the first fed funds rate increase in 1994, after bringing fed funds down to 3% after the commercial real estate crisis of the early 1990&#8217;s (brought about I might add by the 1986 Reagan Tax Reform legislation) while this Fed has been gradually raising rates since December, 2015.<\/p>\n<p>What&#8217;s the old maxim about history not repeating but often rhyming ?<\/p>\n<p>My own opinion is that this stock market&#8217;s action is less about trade, tariff&#8217;s, Russia, the FBI, etc.etc. than the yield curve in 2018.<\/p>\n<p>Supposedly the fed target is 3% Fed Funds in order to be &#8220;neutral&#8221; &#8211; this could go on a while (rising rates, etc.)<\/p>\n<p>But SP 500 earnings growth &#8211; like a beach-ball being pushed under water &#8211; should keep the Sp 500 index and the general equity market from falling apart.<\/p>\n<p>Just thinking out loud and trying to peer through the fog.<\/p>\n<p>Thanks for reading.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Fwd 4-qtr est: $164.11 vs last week&#8217;s $163.16 P.E ratio: 16.5x PEG ratio: 0.76x SP 500 earnings yield: 6.05% vs&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":[91],"tags":[],"class_list":["post-7803","post","type-post","status-publish","format-standard","hentry","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\/7803","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=7803"}],"version-history":[{"count":2,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/7803\/revisions"}],"predecessor-version":[{"id":7805,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/7803\/revisions\/7805"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7803"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7803"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7803"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}