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Global Woes and Earnings - March 18, 2019

The U.S. economy was firing on all cylinders for much of 2018. The global economy started 2018 on an upbeat note but growth quickly began to moderate. This year, U.S economic growth has begun to moderate, and the global economy has downshifted into a low gear.

In part, it’s one reason Fed Chief Jerome Powell recently said he’s been seeing “some crosscurrents and conflicting signals.” It’s a big reason why the Fed is no hurry to raise interest rates right now.

We not only see it in the economic data, but also in the Q1 earnings outlook. Look at the graphic below. It is the forecast for first quarter profits for S&P 5003 companies broken into three categories.

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A Mixed Message - March 13, 2019

U.S. economic growth has moderated from Q2’s 4.4% annualized pace to 2.6% in the final quarter of 2018 (U.S. BEA).

While quirks in the data gathering process may be impacting some reports, various economic releases suggest growth has continued to slow in Q1.

  • Nonfarm payrolls grew by just 20,000 in February (U.S. BLS).
  • But the jobless rate fell to 3.8% from 4.0%.

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Happy Birthday - March 11, 2019

The bull market turned 10-years old on Saturday, March 9th. During the depth of the Great Recession, the S&P 500 Index touched a bottom of 676.53 on March 9, 2009 (St. Louis Federal Reserve). The Dow Jones Industrial Average bottomed the same day at 6,547.05. On Friday, the respective averages closed at 2,743.07 and 25,450.24 (MarketWatch).

Another way to view the decade’s progress: the total average annual return for the S&P 500 Index, including dividends reinvested, came to 17.5% per year. The same metric for the Dow has been 17.4% per year (through 3/7/19, S&P Dow Jones Indices).

The graphic below compares the current bull market with the five longest bull runs since WWII.

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In Like a Lion - March 6, 2019

As we enter March, we are coming up on the 10-year anniversary of the bull market. In the depths of the Great Recession, the S&P 500 Index1 bottomed at 676.53 on March 9, 2009 (S&P DJ Indices).

The S&P 500 Index closed at 2,792.81 on March 4.

  • The index is up 312% over the period.
  • The annualized total return (includes reinvested dividends) is 17.7% (S&P DJ Indices).

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Economy Closes Out 2018 on a Good Note - March 4, 2019

The Q4 report on GDP (Gross Domestic Product—the widest measure of goods and services produced) was delayed by a month due to the government shutdown. On Thursday, the U.S. BEA reported the economy expanded at an annual pace of 2.6% in Q4, topping expectations of 2.2% per the Wall Street Journal.

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