The last two weeks the Fear monitor that most investors watch $VIX has been in a bullish trend. Unless you have been knee deep with other projects, you know there is a trade war between China and the United States. Trump signed an executive order last week issuing a state of emergency and targeted Huawei. China tried to use the DJI against the president by announcing last week right before the market closed that the
Trade negotiation have failed. I did not like how the market closed last week and will be watching the Sunday open to get a glimpse on how the market will trade throughout the week.
Growth is slowing in the U.S. and with the trade war heating up, I bet we will see a bit more. Some of the ETF’s we are bullish on right now are $XLE, $XLRE, and $XLU. These stocks perform well in slower growth and higher inflation.
I am bearish on $IWM right now. With lower growth and inflation causing items to be more expensive, the smaller companies will suffer more than the “blue chip” and large cap stocks that make up the NASDAQ and SP500.
Happy Monday. Good Luck out there this week.
Global Spotlight
U.S. Declares War on Huawei. The White House launched a double whammy against Huawei this week. President Donald Trump signed an executive order blocking Huawei equipment from being sold in the United States but more importantly, the U.S. Commerce Department placed the Chinese tech giant on its blacklist, which will make it difficult for Huawei to use much-needed U.S. technology in its products.
Tensions Escalate in the Persian Gulf. There is clearly a deepening strain in the U.S.-Iran relationship that is forcing us to consider the increasing possibility of military conflict.
U.S. Tariff Strategy Threatens Some Trade Negotiations. As expected, President Trump now has a Commerce Department report in hand that will allow him to make good on his threat to impose a sweeping 25 percent tariff on U.S. automotive imports — with six months to decide.
Theresa May’s Time Is Up. The political crisis in the United Kingdom keeps intensifying, as Prime Minister Theresa May promised her Conservative Party that she will announce the date of her resignation in June, and the talks between the government and Labour over a joint Brexit plan ended without an agreement.
Stratfor.com
Economic Calendar
Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.
Briefing.com
Last Weeks Numbers
Review Last weeks numbers here.
Earnings
Aggregate Estimates and Revisions
- First quarter earnings are expected to increase 1.4% from 18Q1. Excluding the energy sector, the earnings growth estimate is 2.8%.
- Of the 460 companies in the S&P 500 that have reported earnings to date for 19Q1, 75.2% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 76%.
- 19Q1 revenue is expected to increase 5.6% from 18Q1. Excluding the energy sector, the growth estimate is 6.2%.
- 56.6% of companies have reported 19Q1 revenue above analyst expectations. This compares to a long-term average of 60% and prior four quarter average of 67%.
- For 19Q2, there have been 55 negative EPS preannouncements issued by S&P 500 corporations compared to 17 positive, which results in an N/P ratio of 3.2 for the S&P 500.
- The forward four-quarter (19Q2 –20Q1) P/E ratio for the S&P 500 is 16.7.
- During the week of May 20, 24 S&P 500 companies are expected to report earnings.
Thomson Reuters I/B/E/S
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