Everyday, Everyday I Have the Blues
By John Stoltzfus,
Chief Investment Strategist
Trend Analysis
Market Strategy Radar Screen Weekly - April 27, 2015
In this article:
- Market Analysis
- S&P 500
- Asset Allocation
What Have You Done for Me Lately?
As bull market matures, investors become increasingly impatient for performance
As the bull market has gained increased (if still grudging) acceptance, so have expectations for continued improvement in fundamentals to justify the road just traveled as well as to point the direction of the road ahead.
With the S&P 500 and the Nasdaq Composite perched at new record highs reached just last week, investors will have their hands full in the days ahead keeping track with a busy calendar that includes:
- S&P 500 Earnings (162 companies reporting);
- Economic data including: Manufacturing, Services, Housing Prices, Home sales, Q1 GDP, personal consumption, income, spending, the PCE deflator, as well as unemployment claims and consumer confidence levels;
- The Fed’s FOMC meeting on Tuesday and Wednesday.
Earnings: Progress not Perfection
With a little more than 40% of the S&P 500’s companies having reported earnings to date for Q1 2015, 73% have reported earnings above the mean estimate and 47% have reported revenues (sales) above the mean estimate per FactSet. The percentage of companies reporting revenues above estimates is below the 5-year average of 58%.
A First Quarter does not a year make (or break)
FactSet noted last week in its earnings comments that should the 47% revenue beat rate be the final percentage for the quarter, it would mark the lowest percentage of companies reporting sales above estimates since 2013 (when it was also 47%).
Inveterate contrarians that we are, we found it less discouraging after recalling that the first quarter of 2013 had read originally on the weak side for GDP at 1.1% (eventually revised to 2.7%) and that growth had improved in the subsequent quarters with Q2, Q3 and Q4 growth rising 1.8%, 4.5% and 3.5%, respectively that year. We also remember 2013 as a year that saw solid annual performance from the S&P 500—notwithstanding a few thrills and spills along the way.
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