{"id":9034,"date":"2019-06-01T16:49:00","date_gmt":"2019-06-01T16:49:00","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=9034"},"modified":"2019-06-01T16:49:00","modified_gmt":"2019-06-01T16:49:00","slug":"sp-500-earnings-update-how-have-2019-sector-growth-rates-changed-in-last-8-weeks","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=9034","title":{"rendered":"SP 500 Earnings Update: How have 2019 Sector Growth Rates Changed in Last 8 Weeks ?"},"content":{"rendered":"<p>&#8220;Worst Week for Stock Markets since Christmas&#8221; (presumably Christmas &#8217;18).<\/p>\n<p>The headline is a Bloomberg quote caught while prepping the weekly SP 500 earnings update, Saturday morning, June 1st.<\/p>\n<p>From a sentiment perspective, it does now seem like absolutely no one is bullish.<\/p>\n<p>These are tough markets to navigate when futures can drop 200 &#8211; 300 points on a President Trump tweet. Headlines are driving the action.<\/p>\n<p>What&#8217;s worse &#8211; keeping one eye on Bloomberg as this is being written &#8211; President Trump announced (and I&#8217;m not sure when) that India has lost it&#8217;s &#8220;developing nation&#8221; status since &#8211; according to President Trump &#8211; India has not sufficiently opened their markets to US products and manufacturers.<\/p>\n<p>So both Mexico and India have would up in the (Pres) Trump tariff tantrum corner.<\/p>\n<p>Here is an update on SP 500 Earnings as of 5\/31\/19 (Source: IBES by Refinitiv):<\/p>\n<ul>\n<li><em><strong>Fwd 4-qtr estimate:<\/strong><\/em> $171.47 vs last week&#8217;s $171.60<\/li>\n<li><em><strong>PE ratio:<\/strong><\/em> 16x<\/li>\n<li><em><strong>PEG ratio:<\/strong><\/em> 3.5x<\/li>\n<li><em><strong>SP 500 earnings yield:<\/strong><\/em> 6.23% vs last week&#8217;s 6.07%<\/li>\n<li><em><strong>Year-over-year growth of fwd est:<\/strong><\/em> +4.66% vs last week&#8217;s 4.76%<\/li>\n<\/ul>\n<p><em><strong>Summary \/ conclusion: <\/strong><\/em>May &#8217;19 was quite brutal for the SP 500 as the key benchmark is now down 4.5% year-to-date, and both the SP 500 and the Nasdaq ended the week of May 31 and the month of May &#8217;19 below their respective 200-day moving averages, although the SP 500 is now further below than the Nasdaq Composite and the Nasdaq 100.<\/p>\n<p>While the likely effects of the China tariff&#8217;s are not yet in the SP 500 earnings numbers, the uncertainty and the rhetoric are making CEO&#8217;s and corporate board&#8217;s nervous and that usually makes them cautious, thus undoing the potentially positive effects of the tax cuts and the TC&amp;JA.<\/p>\n<p>Go figure. I just don&#8217;t get it, particularly the latest Mexico shot across-the-bow.<\/p>\n<p>While vocal and actively-Democratic CEO&#8217;s such as Lloyd Blankfein support the President&#8217;s China initiatives, particularly the IP transfer and technology protections, and many American&#8217;s understand the security implications of Huawei, the headlines and the uncertain comments by Secretary Mnuchin and TR Lighthizer around Mexico only add to the uncertainty of the blaring headlines.<\/p>\n<p>How have full-year 2019 SP 500 Sector growth rates changed the last 8 weeks or since April 1, &#8217;19 ?<\/p>\n<p><em><strong>Sectors which are now expecting faster EPS growth in 2019:\u00a0<\/strong><\/em><\/p>\n<ul>\n<li><em><strong>Consumer Discretionary:<\/strong><\/em> improved from 6.8% to 6.9% the last 8 weeks;<\/li>\n<li><em><strong>Energy: <\/strong><\/em>-8.8% today vs-11% as of April 1; (truly a surprise given the drop in crude.)<\/li>\n<li><em><strong>Financials: <\/strong><\/em>+9.4% today vs +8.8% on April 1;<\/li>\n<li><em><strong>Health Care: <\/strong><\/em>+6.1% today, vs +5.5% on April 1;<\/li>\n<li><em><strong>Real Estate: <\/strong><\/em>+4.3% today vs +3.8% as of April 1;<\/li>\n<li><em><strong>Info tech: <\/strong><\/em>-1.9% today vs -1.9% on April 1; (We&#8217;ll call that a win, given Apple&#8217;s issues)<\/li>\n<\/ul>\n<p>Source: IBES by Refinitiv<\/p>\n<p>Remember too this is an &#8220;expected&#8221; improvement for calendar 2019, not just the higher expected growth for Q1 &#8217;19 after earnings reports.<\/p>\n<p>Tech, Financials, Health Care and Consumer Discretionary are 47% of the SP 500 (roughly) by market cap.<\/p>\n<p>Energy is roughly now 5% of the SP 500 by market cap, way down from its 14% &#8211; 15% highs in August, 2014, just before crude oil started unraveling from $100 per barrel.<\/p>\n<p>It&#8217;s hard to find good news with the headlines and price action, but SP 500 earnings trends are just not that bad (yet).<\/p>\n<p>Portfolio&#8217;s are being positioned more defensively with the SP 500 below the 200-day moving average.<\/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<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;Worst Week for Stock Markets since Christmas&#8221; (presumably Christmas &#8217;18). The headline is a Bloomberg quote caught while prepping the&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-9034","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\/9034","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=9034"}],"version-history":[{"count":6,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9034\/revisions"}],"predecessor-version":[{"id":9040,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9034\/revisions\/9040"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9034"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9034"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9034"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}