The Week Ahead | 11/26/2018

November 26, 2018

What signals a weak economy?  Oil Prices? Earnings? Interest Rates?  This week we have a big economic calendar and some equities will be slow to in the beginning due to a short week last week and low trading on Thanksgiving.

Oil has decline to $50.61 last week.  Supply of oil has increased by the US shale oil production.  Everyone knows that the suply of oil has increased, but what about demand.

World oil demand continues a rising trend with some quarterly variation. (IEA)

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Falling oil prices are not an economic signal of a recession.  Be careful not to think of price movement just on demand.  There is a supply story to think about.

World Wide demand remains strong.

There is hardly a correlation between the price of oil and the stock market.

Economic Calendar

Here isa a list of the U.S. economic events happening this week.

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Briefing.com

Review Last weeks numbers here.

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Earnings

Aggregate Estimates and Revisions

  • Third quarter earnings are expected to increase 28.2% from Q3 2017. Excluding the energy sector, the earnings growth estimate declines to 24.8%.
  • Of the 484 companies in the S&P 500 that have reported earnings to date for Q3 2018, 77.9% have reported earnings above analyst expectations. This is above the long-term average of 64% and above the average over the past four quarters of 77%.
  • Third quarter revenue is expected to increase 8.5% from Q3 2017. Excluding the energy sector, the revenue growth estimate declines to 7.4%.
  • 61.4% of companies have reported Q3 2018 revenue above analyst expectations. This is above the long-term average of 60% and below the average over the past four quarters of 73%.
  • For Q4 2018, there have been 57 negative EPS preannouncements issued by S&P 500 corporations compared to 39 positive, which results in an N/P ratio of 1.5 for the S&P 500 Index.
  • The forward four-quarter (18Q4 – 19Q3) P/E ratio for the S&P 500 is 15.5.

Thomson Reuters I/B/E/S

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