yes the data do say it was the case. Here is Igy from May 2016, saying there was no earnings turnaround. But there was and there continues to be. Earnigns were rebounding like mad even as we had this exchange.
yes the data do say it was the case. Here is Igy from May 2016, saying there was no earnings turnaround. But there was and there continues to be. Earnigns were rebounding like mad even as we had this exchange.
agip,
Let's review a couple of facts beyond just the index move up (data from Dow-S&P listed below). Wall Street continued to lower the 2016 non-GAAP operatings earnings as the year progressed, by 9/30/2016 standing at $110.17. Please review your quote of mine criticizing the May 2016 estimate of $114.73. Furthermore, Wall Street has continued to mark down the 2016 number as it currently stands at $108.94.
https://us.spindices.com/documents/additional-material/sp-500-eps-est.xlsxThe weaker dollar theory has not played out. The Fed has raised interest rates and the 10 Year Treasury is about 1% higher than my May post. In case you haven't noticed many retailers are struggling and global financial institutions remain under pressure. It will be intersting to see how favorable the Christmas season was for traditional retailers. In regards to financial institutions, add to the latest list the Italian government rescue of the world's oldest bank.
In case you haven't noticed, the market has more than baked in the optimism you are relying on. The last time non-GAAP EPS was at this level the market was at 1,606 trading at PE of 16.45. Based on the 9/30/2016 close of 2,169 the non-GAAP PE was 22.29. The more appropriate GAAP PE is over 25.
So, I stand by pretty much everything I said in May.
Igy
my understanding is that earnings bottomed in 1Q 16 and rebounded in 2Q and 3Q. quarter over quarter. That's all I'm saying.
page 7, guide to the markets:
https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets/vieweragip,
If you review the Dow/S&P data there was no rebound in second quarter. I believe JPM does a good job, the slant is as you can imagine I would say, is overly optimistic. The non-GAAP estimates are slanted to make valuations and the general theme more optimistic. The facts remains that Wall Street has habitually projected non-GAAP estimates of $130 for years only to achieve $114 at cylcle high. It is glaring that the only constant is the willingness of "investors" to pay more for a unit of earnings. I put a quotation around "investors" since the market is driven by institutions that are promoting the same fantasy that "something" justifies the pay-up. In the end cash flows will have to support the market multiple, if not multiple compression will become self-evident.
Igy
agip,
Do not expect Igy to admit he was wrong. He has a significant character flaw in that area.
Joe
Maserati, You touch on something that continues to bother me about the U.S. stock market. A lot of rationale to buy U.S. stocks is that everything else in the world is not performing well. Therefore, where else are you going to put your money but the U.S. stock market? Its a valid reason for why the U.S. market could continue to go up in the near future. But that seems shaky ground to invest in stocks.
Productivity growth remains very weak by historical standards. It has been so since 2010. But rejoice! Even though lower productivity growth started after the financial crises and the bank bailouts, it looks like media pundits are embracing Greenspan who says entitlement spending (SS, Medicare, food stamps) is to blame. In other words, its all poor people's fault for the lack for productivity. On the other hand, there is a movement among the big tech corporations that argues that the productivity metric is out of date and that productivity is in fact greater than what statistics show. In any case, its not the fault of the investment community.
agip wrote:
existing home sales at new cycle highs
there is hardly a negative econ number these days.
things are gathering momentum
SS and Medicare are not just for poor people.
U.S. futures on Thursday pointed to a muted open, as analysts suggested the post-election rally is catching its breath as the Christmas weekend approaches.
Investors are waiting for a raft of economic data due before the open that might jolt the market out of its pre-holiday lull.
S&P 500 futures edged down by 2.15 points, or 0.1%, to 2,258.25, while Dow Jones Industrial Average futures inched lower by 13 points, or 0.1%, to 19,878. Nasdaq-100 futures shed 7.25 points, or 0.2%, to 4,942.25.
On Wednesday, the S&P 500 , Dow industrials and Nasdaq Composite all closed between 0.1% and 0.2% lower, as the Dow failed again to climb above 20,000, a mark seen as psychologically important.
"With the DJIA flirting with the 20,000 level, we are reminded that millennium and century marks on major stock indices have traditionally acted like rusty doors, requiring several attempts before finally swinging open," said Sam Stovall, CFRA's chief investment strategist, in a note.
"Therefore, it should come as no surprise if stocks take a breather to digest recent gains," he said.
Economic docket: A third estimate on U.S. third-quarter economic growth is slated to hit at 8:30 a.m. Eastern Time, with economists polled by MarketWatch forecasting expansion of 3.3%.
At that same time, investors are due to receive a reading on weekly jobless claims, with 258,00 claims expected, as well as a November report on durable-goods orders, with a decline of 4.8% anticipated.
At 10 a.m. Eastern, a November release on personal income, consumer spending and core inflation is on tap. Economists expect a 0.3% increase in income and spending, along with a 0.1% rise for the inflation figure.
The 1950's saw the start of a decade+ bull run that saw the s&p rise 400% during a period of rising interest rates. The two don't have to move in opposite directions.
the falling productivity is fascinating. It may be mismeasured of course, but I've seen some interesting explanations for it. -one study found that productivity only goes up when the number of 40-49 year olds is growing. We don't have that now, so productivity is falling, but soon that number will start rising again, so productivity shoudl rise then-productivity gains in a service economy are very hard to get. How much faster can a laywer work? a cook cook? Productivity truly rises in a manufacturing economy so we are unlikely to get much more of it-aging...the boomers are skewing every statistic incl. this one. People into their 60s and 70s are less productive, but they will die soon enough and that should get the numbers going back up again
ryan foreman wrote:
Productivity growth remains very weak by historical standards. It has been so since 2010.
But rejoice! Even though lower productivity growth started after the financial crises and the bank bailouts, it looks like media pundits are embracing Greenspan who says entitlement spending (SS, Medicare, food stamps) is to blame. In other words, its all poor people's fault for the lack for productivity.
On the other hand, there is a movement among the big tech corporations that argues that the productivity metric is out of date and that productivity is in fact greater than what statistics show.
In any case, its not the fault of the investment community.
agip wrote:existing home sales at new cycle highs
there is hardly a negative econ number these days.
things are gathering momentum
econ today:
GDP : The third-quarter lived up to its early expectations, rising with each new revision to an inflation-adjusted 3.5 percent annualized rate for the best showing in two years.
corporate profits:
Corporate profits rose 4.3 percent year-on-year
house prices: Home-price appreciation has been moderate this year, trending in the 5 percent range for most readings. The FHFA house price index, however, has been running slightly stronger, in the 6 percent range and near a 2-1/2 year high
hehheh
all fake - it's all fake
then the Dow jumped 13%
yeah, I'll never get it maser, never. I must be a terrible investor.
but you've been out since 16,500 - you've missed the last 20% rise, plus dividends. but...you...are...laughing at..........me?
that was from june 17, 2016
Ghost of Igloi wrote:
Maserati and coach d,
The bottom line for me in all of this is another 50% decline in the stock market.
Igy
I'm only half trying be a jerk here - I think there is a lesson for us all by reviewing wrong predictions. We should all be more humble.
That was Igy, on 2/24/16 - since then the dow is up 20.8% plus dividends
Econ 101 wrote:
Of course, like everyone else on here, I'm wrong at least half the time. Good luck.
Quote of the Day wrote:
The two rules of forecasting.
Rule 1: For each forecast, there is an equal and opposite forecast.
Rule 2: Both of them are wrong.
-- Bill Berger (again)
Jim Rogers - Brexit would be worst bear market in our lifetimes.
No. it wasn't. (although to be fair, he could have been talking about years down the road as the EU dissolves)
Article also says he was short US stocks in June 2016. bad move.
and long china. He broke even on that one
back to the pros.
Harry Dent, in 2015, predicting the market of end 2016:
“Many of Wall Street’s pundits want to you to believe the worst is over – and that, except for a few bumps in the road here and there, we’re well on the road to recovery. But that’s not what my research indicates. Not even close. The Dow has finally crossed the 17,000 mark and now I see it winding down, week after week… falling to 6,000 by late 2016 or early 2017.â€
http://www.savvy-team.com/hww/a-retirement-option-for-baby-boomers/
don't play dat
agip wrote:
Ghost of Igloi wrote:Maserati and coach d,
The bottom line for me in all of this is another 50% decline in the stock market.
Igy
I'm only half trying be a jerk here - I think there is a lesson for us all by reviewing wrong predictions. We should all be more humble.
That was Igy, on 2/24/16 - since then the dow is up 20.8% plus dividends
agip,
No offense intended or taken here. In this business, I believe that one should have an opinion of their own and that opinion should be based on facts. Having an opinion on the market should not be viewed as expressing hubris. In fact those that express skepticism like in the run-up to Black Tuesday in 1929 become "Doom Mongers."
A month after my post of 2/24/2016, Wall Street expected 2016 non-GAAP EPS to reach $118.12. Currently the Wall Street estimate has been marked down to $108.94. At that same time, the 2017 estimate was set at $135.95, and now stands at $131.11. Let me remind you that Last Twelve Month (LTM) non-GAAP S&P EPS has never exceeded $114.51--never---ever. So any belief that the investment environment has improved since that post is based more on hope than reality.
So what do we really have in this wonderful market everyone is cheering for? It is an environment where "investors" (and I use this term loosely, and should more appropriately called institutional investors) are willing to pay up for a unit of earning. From cycle peak earnings (9/30/2014) a non-GAAP PE of 17.22 to (9/30/2016) 22.29, an increase of 29.44%. When using the more appropriate GAAP numbers, we see a move from 18.61 to 25.39 or 36.43%.
There is nothing new her, just "investors" making the same mistakes as in the past. My view remains, and has been stated before, the run-up in the market only makes the reversion to mean even worse. The current market set-up represents one of the worst investment environments in history. There is nothing other than a revisionist view, which is not based on market history, to state otherwise.
Igy