For a solid week now, all you’ve heard from the media is Inverted Yield Curve, Recession, and the Economy is Weakening…
I watch the economy very closely, and what I see is a booming economy with record low unemployment, and the FED is lowering interest rates – historically a great time to buy stocks.
What Really Matters is This: The S&P is up 14% this year, with 6 positive months and only 1 down month. The S&P is a barometer of the economy. I believe the economy is rock solid. In my opinion, odds are the market will be higher at the end of the year than where it is right now.
Happy Monday. Good Luck out there this week.
Global Spotlight
After a Manic Week for the Markets, Some Perspective. First came the emerging market contagion fears when Argentina’s Aug. 11 presidential primary elections triggered a massive currency and stock sell-off. Then came a big bounce when U.S. President Donald Trump announced on Aug. 13 that he would save Christmas and delay tariffs on China.
Is Hong Kong Crossing Beijing’s Red Line? A dramatic week of protests that succeeded in shutting down Hong Kong’s international airport has raised the potential for direct intervention by Beijing.
The Taiwan Factor. Besides Hong Kong, there’s another big complication to the U.S.-China trade talks: Taiwan. The Trump White House is moving ahead with an $8 billion sale of F-16V fighter jets to Taiwan.
Beijing, Seoul and Tokyo Convene. China will host a trilateral meeting on Aug. 21 with the foreign ministers of Japan and South Korea with an eye for a possible leadership summit by the end of the year.
The Problems With Labour’s Brexit “Brakestop” Plan. The opposition Labour Party’s plans to oust Prime Minister Boris Johnson and avoid a hard Brexit include a no-confidence motion, followed by a temporary government led by Labour leader Jeremy Corbyn, who will ask the European Union to delay Brexit so the United Kingdom can hold a general election.
While Italy Bickers Internally, Germany Resists Fiscal Stimulus. The next chapter of Italy’s political crisis will be written on Aug. 20, when Prime Minister Giuseppe Conte gives a speech in Parliament that could be followed by a no-confidence motion triggered by the right-wing League party.
A Compromising Peace in Afghanistan. While the White House is reviewing a pending peace plan with the Taliban, a blast in Pakistan targeting a mosque frequented by Taliban leader Mullah Haibatullah Akhundzada raises questions over whether all of the insurgency’s factions support Trump’s peace push.
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
source I/B/E/S data from Refinitiv
Aggregate Estimates and Revisions
- Second quarter earnings are expected to increase 2.9% from 18Q2. Excluding the energy sector, the earnings growth estimate is 3.6%.
- Of the 463 companies in the S&P 500 that have reported earnings to date for 19Q2, 73.3% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 76%.
- 19Q2 revenue is expected to increase 4.7% from 18Q2. Excluding the energy sector, the growth estimate is 5.1%.
- 56.9% of companies have reported 19Q2 revenue above analyst expectations. This compares to a long-term average of 60% and an average over the past four quarters of 63%.
- For 19Q3, there have been 61 negative EPS preannouncements issued by S&P 500 corporations compared to 21 positive, which results in an N/P ratio of 2.9 for the S&P 500 Index.
- The forward four-quarter (19Q3 –20Q2) P/E ratio for the S&P 500 is 16.5.
- During the week of August. 19, 19 S&P 500 companies are expected to report quarterly earnings.
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