Overseas Madness - February 20, 2019

U.S. economic growth is showing signs of moderating; economic data in Europe and China have pointed to a sharper slowdown, which began earlier last year.

We’re seeing it play out in earnings growth between companies that conduct most of their business at home vs larger multinationals that conduct much of their business overseas.

Table 1 illustrates the breakdown in earnings and revenue growth. Profit growth is nearly twice as strong for firms that conduct most of their business at home.

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Mid-Week Notes Feb. 13th 2019

Slow Ride – Q4 Earnings Solid but Growth Set to Stall in Q1

Q4 S&P 5001 earnings are expected to rise 16.5% from a year ago (as of Feb 12, with 69% of companies having reported – Refinitiv).

  • Most companies have topped analyst forecasts.

Q1 hits a wall

FactSet and Refinitiv are forecasting a decline of just under 1% in S&P 500 profits during Q1.

  • Forecasts issued by firms have been less optimistic.

  • Profit margins appear to be coming under pressure amid higher costs.

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Rocky Road Overseas - February 11, 2019

The U.S. economy was an outperformer in 2018. U.S. Gross Domestic Product (GDP) surpassed 4% in the second quarter and 3% in the third quarter (U.S. BEA). While data have been a little more mixed lately, job growth was strong in December and January (U.S. BLS). Overseas, however, the picture isn’t as sanguine.

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January was Impressive, Now What - February 6, 2019

Stocks were extremely oversold in late December.

  • December’s selloff didn’t reflect the economic fundamentals.

  • The S&P 500 Index1 has advanced 16% from the Dec. 24 low through Feb. 4 (St. Louis Fed data).

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A Kinder Gentler Fed - February 4, 2019

The Federal Reserve ended its two-day meeting and left interest rates unchanged – no surprise. However, we witnessed a shift in the tone and substance from the central bank. Investors greeted the change with a cheer.

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