Datariffic
Datariffic
Data coming in this week with Fed Meetings, jobless claims and a flurry of earnings from several of the big tech names.
It’s been interesting to see so far, this earnings season that according to JP Morgan, 79% of companies have beaten on earnings and 57% have beaten on revenue numbers. As you can see from the graph below, we have some strong expectations of earnings moving forward.
We’re looking for this quarter to come in around $29 of earnings for the S&P 500. For the year were looking for $130. The green lines are the estimates that we are looking for which is substantially higher than the previous quarters, however this has been setting up since the low point in earnings in 4Q 2015.
Sectors
This week I spent some time looking through the sectors. As you know we like and recommend overweight’s in Technology, Industrials, Financials & Energy. Technology will probably be an overweight for some time given the innovation explosion that we are in. Industrials may benefit from an America First policy. Financials and Energy have some interesting graphs.
The graph below shows the correlation between the 10-year treasury yields and the return of the financial sector. JP Morgan shows that the correlation is 76%. This goes to the theory that as rates rise so do the banks’ profits.
Energy tells a different story, but is starting to give some interesting signals. The charts have been so bad for the energy stocks that the models that our strategists follow have turned positive. Catching a falling knife is what I often hear this referred to, however in this case I tend to agree with our strategy team. Earnings for this sector may provide the biggest Q over Q in the S&P 500 and I feel the bottom is near.
In summary, so far so good. We have a long way to go but there are encouraging signs.
The buy sell for this week
Source: MG&A
As always should you have any questions, please don’t hesitate to give us a call
Have a great week.
Any opinions are those of Mick Graham and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. Holding stocks for the long-term does not insure a profitable outcome. Investing in stocks always involves risk, including the possibility of losing one's entire investment. There is no guarantee that any statements, opinions or forecasts provided herein will prove to be correct. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector including limited diversification. Investments in the energy sector are not suitable for all investors. Further information regarding these investments is available from your financial advisor. Material is provided for informational purposes only and does not constitute a recommendation. U.S. Treasury securities are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value.
