Last week we I was worried that we had gone up to far to fast because of an air pocket due to unrealistic market expectations. This week I stepped back and asked my self has anything changed? Fundamentally, No.
- Case are on the rise due to more testing. The real number to look at is the number of tests that come back positive. and that number is real low, in the 5-6% range, without wide spread testing.
- Everyone knows that the economy is in a deep economic hole and the recovery will take time.
So despite last week’s pullback, nothing really has changed and that is something positive to look at this week.
Fair Value of this market is still between 2800 – 3000 in the S&P 500 (based on 18XC multiple and expected $163 2021 S&P 500 earnings, so 18 * 163 = 2934, right where we are trading)
I continue to see this market as a hold.
Happy Monday. Good Luck out there this week.
Global Spotlight
The uptick in the frequency of U.K.-EU trade talks late this month. British Prime Minister Boris Johnson will hold a summit with the presidents of the European Commission, the European Council and the European Parliament in an attempt to unblock free trade negotiations between the United Kingdom and the European Union.
Protests heaping pressure on the Lebanese government to devalue the currency and stabilize the economy. Lebanon’s central bank will be under intense pressure in the coming week to devalue the volatile Lebanese pound, the value of which plummeted over the past week by 50 percent on the unofficial parallel market.
A possible acceleration in the Hong Kong national security law’s timetable. China’s Standing Committee of the National People’s Congress on June 18 will begin working on the Hong Kong national security legislation approved earlier this month, and the measure could be imposed on the city before the end of June.
New numbers from China could give a better idea of economic recovery. China releases new economic data on June 15 that will further understandings of how fast it is recovering from the 6.6 percent year-on-year fall caused by COVID in 2020 Q1 GDP.
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.
After a quiet week last week, the VIX surged on Thursday. the Fed failed to confirm that the economy was on track as the coronavirus outbreak subsides. The S&P fell 4.78% to 3041.31 on the week and now is down 5.86% YTD.
Earnings
Source I/B/E/S data from Refinitiv
Aggregate Estimates and Revisions
- 20Q1 earnings are expected to decrease 12.7% from 19Q1. Excluding the energy sector, the earnings growth estimate is -12.1%.
- Of the 497 companies in the S&P 500 that have reported earnings to date for 20Q1, 65.0% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 74%.
- 20Q1 revenue is expected to decrease 1.4% from 19Q1. Excluding the energy sector, the growth estimate is -0.5%.
- During the week of June 15, seven S&P 500 companies are expected to report quarterly earnings.
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