{"id":8546,"date":"2018-12-21T00:26:28","date_gmt":"2018-12-21T00:26:28","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=8546"},"modified":"2018-12-21T00:26:28","modified_gmt":"2018-12-21T00:26:28","slug":"sp-500-earnings-yield-at-6-88","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=8546","title":{"rendered":"SP 500 Earnings Yield at 6.88%"},"content":{"rendered":"

The SP 500 Earnings Yield is at 6.88% as of Thursday, December 20th, 2018. The 6.88% level is now above the highs from the 2015 – 2016 correction but still well below the 8% – 9% hit during the 2011 20% drop in the SP 500.<\/p>\n

The forward estimate slid a little this week from Monday’s $170.22 to today’s $169.85. It will be updated this weekend. This erosion is normal as we move through a quarter.<\/p>\n

When January 1 rolls over, into 2019, the current EPS estimate for calendar 2019 for the SP 500 is $174 and change. Using the current calendar year 2017 EPS estimate of $174, the SP 500 earnings yield as of tonight’s close is 7%.<\/p>\n

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Two scary charts:<\/p>\n

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click to enhance \/ enlarge<\/figcaption><\/figure>\n

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The plunge in FDX has been dramatic. The stock hit a high of $274 in Jan ’18. Its now down over $100 per share in under 12 months and most of that since December 1 when it traded at $230. Some shares of FDX were bought at the 200-week moving average in the low $190’s pre-earnings, but have since been sold.<\/p>\n

 <\/p>\n

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click to enhance \/ enlarge<\/figcaption><\/figure>\n

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Still, on price and per Morningstar data, the HYG has fallen 1.3% this year, and measuring performance on NAV, the HYG is down less than 1%.<\/p>\n

Clients have no position in high-yield for over 2 years: some was bought after HYG widened out substantially with the 2015 – 2016 correction but it was all sold by the end of 2016.<\/p>\n

A 5.5% current yield on the HYG just isn’t that enticing. Energy is a 14% weight in the ETF per the iShares website with “Communications” being a whopping 23.7%.<\/p>\n

In 2002, with the TMT selloff (Tech, Media and Telecom) high yield spreads widened out to 13% – 15% and of course between 2007 – 2009, high yield spreads blew out to 25%.<\/p>\n

The YTD return on the SP 500 (per Morningstar data) is -4.5% and presumably that return is updated nightly.<\/p>\n

Thanks for reading.<\/p>\n

 <\/p>\n

 <\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

The SP 500 Earnings Yield is at 6.88% as of Thursday, December 20th, 2018. The 6.88% level is now above…<\/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":[10,40,162],"tags":[],"class_list":["post-8546","post","type-post","status-publish","format-standard","hentry","category-fdx","category-hyg","category-sp-500-earnings-yield"],"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\/8546","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=8546"}],"version-history":[{"count":6,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/8546\/revisions"}],"predecessor-version":[{"id":8554,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/8546\/revisions\/8554"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8546"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8546"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8546"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}