Displaying items by tag: earnings

(New York)

Not a day after warning about the unstable financial practices of S&P 500 companies, Goldman Sachs has just gone on the record saying that the S&P 500 is set for another round of big gains. The bank raised its year-end forecast for the index to 3,100. Goldman thinks that stocks are currently trading at fair valuations, and that “The dovish Fed pivot has driven the equity market rally in 2019, and we expect low interest rates will continue to support above-average valuations going forward”. The bank contends stocks will rise a further 10% in 2020.


FINSUM: We think stocks are going to move in line with the economy. If growth stays okay, and the Fed stays dovish, we are in for a move higher. We think the best odds are for a bull case.

Published in Eq: Total Market
Friday, 12 July 2019 08:34

US Earnings Recession Coming

(New York)

Second quarter earnings season is about to begin, and nobody has much expectation for good news. Analysts across the board expect earnings to shrink, brining back the first profit recession since 2016. Materials, technology, and consumer discretionary are set to get hit the hardest, but the majority of sectors are likely to see losses. Analysts estimate the average earnings decline for the S&P 500 will be 2.8%.


FINSUM: It will be interesting to se if this has any effect on stocks. Given it is so telegraphed, we don’t think there will be a big impact unless the losses are much steeper than expected.

Published in Eq: Total Market
Wednesday, 10 July 2019 09:14

Goldman Warns of Big New Risk to Stocks

(New York)

There is a big new risk to stocks to worry about, says Goldman Sachs. Actually, it is a not a new risk, it is an old one that investors have not been thinking about. The risk? Pay. The bank says that rising pay pressure from workers could hurt companies at all levels and eat into margins. The labor market is incredibly tight, which puts upward pressure on pay and downward pressure on corporate margins. Wage growth is already at its highest rate since 2007, and companies may feel the sting. According to Goldman, “While S&P 500 profit margins are at historical highs, survey data indicates a record level of corporate concern regarding labor costs”.


FINSUM: Many analysts have been predicting an earnings recession and this is one of the factors that could exacerbate it.

Published in Eq: Total Market
Wednesday, 03 July 2019 08:59

The Earnings Recession May Cause a Bear Market

(New York)

Earnings recessions don’t always hurt that much, but they don’t help. Just look at the 2015-2016 period, when earnings didn’t perform well. Markets didn’t lose much, but they were mostly flat. Now we are re-entering that paradigm, as many companies are cutting earnings and it looks like the first earnings recession in three years is coming. Earnings are very likely to fall in the second quarter, with average analyst estimates calling for a nearly 3% decline across the board. So far, 20 of the S&P 500’s companies have reported and the average earnings fall has been 15%.


FINSUM: A bigger than expected decline in earnings could seriously change the risk-reward outlook of markets. This seems like an important risk right now.

Published in Eq: Total Market
Thursday, 02 May 2019 13:39

How to Predict Apple’s Stock Price

(San Francisco)

Want to forecast at where Apple’s stock price is headed? There is a good trick for doing so. The method is to look at the earnings and share price moves of Apple’s suppliers. About a third of suppliers report earnings before Apple does, and many of them derive a high portion of their sales from the company. Therefore, one can fairly well predict Apple’s earnings and likely moves. For instance, Apple has been on a tear since its earnings on Tuesday, and it would have been easy to see from the previously released supplier earnings.


FINSUM: This will not always work and some of the value is probably eaten up by algorithmic traders, but still, it seems a good predictive indicator.

Published in Eq: Tech
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