Trends Of S&P500 Earnings Forecasts

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of October 17, 2014:

from page 26:

(click on charts to enlarge images)

Change in Bottom-Up EPS vs. Top-Down Mean EPS (Trailing 26-Weeks) 

S&P500 earnings estimates trends

from page 27:

Calendar Year Bottom-Up EPS Actuals & Estimates

S&P500 annual EPS

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1904.01 as this post is written

S&P500 Earnings Estimates For 2014 Through 2017

As many are aware, Thomson Reuters publishes earnings estimates for the S&P500.  (My other posts concerning S&P earnings estimates can be found under the S&P500 Earnings tag)

The following estimates are from Exhibit 12 of “The Director’s Report” (pdf) of October 17, 2014, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts:

Year 2014 estimate:

$118.05/share

Year 2015 estimate:

$132.06/share

Year 2016 estimate:

$147.08/share

Year 2017 estimate:

$138.00/share

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1904.01 as this post is written

Standard & Poor’s S&P500 Earnings Estimates For 2014 & 2015 – As Of October 16, 2014

As many are aware, Standard & Poor’s publishes earnings estimates for the S&P500.  (My posts concerning their estimates can be found under the S&P500 Earnings tag)

For reference purposes, the most current estimates are reflected below, and are as of October 16, 2014:

Year 2014 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $118.37/share

-From a “top down” perspective, operating earnings of N/A

-From a “top down” perspective, “as reported” earnings of $111.72/share

Year 2015 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $135.11/share

-From a “top down” perspective, operating earnings of $135.84/share

-From a “top down” perspective, “as reported” earnings of $134.90/share

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1886.76 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – October 17, 2014 Update

As I stated in my July 12, 2010 post (“ECRI WLI Growth History“):

For a variety of reasons, I am not as enamored with ECRI’s WLI and WLI Growth measures as many are.

However, I do think the measures are important and deserve close monitoring and scrutiny.

The movement of the ECRI WLI and WLI, Gr. is particularly notable at this time, as ECRI publicly announced on September 30, 2011 that the U.S. was “tipping into recession,” and ECRI has reiterated the view that the U.S. economy is currently in a recession, seen most recently in these twelve publicly available sources :

Other past notable year 2012 reaffirmations of the September 30, 2011 recession call by ECRI were seen (in chronological order) on March 15 (“Why Our Recession Call Stands”) as well as various interviews and statements the week of May 6, including:

Also, subsequent to May 2012:

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Below are three long-term charts, from Doug Short’s blog post of October 17, 2014 titled “ECRI Recession Watch:  Weekly Update.”  These charts are on a weekly basis through the October 17 release, indicating data through October 10, 2014.

Here is the ECRI WLI (defined at ECRI’s glossary):

ECRI WLI

This next chart depicts, on a long-term basis, the Year-over-Year change in the 4-week moving average of the WLI:

Dshort 10-17-14 - ECRI-WLI-YoY 2.5 percent

This last chart depicts, on a long-term basis, the WLI, Gr.:

ECRI WLI,Gr.

_________

I post various economic indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1888.21 as this post is written

Deflation Probabilities – October 15, 2014 Update

While I do not agree with the current readings of the measure – I think the measure dramatically understates the probability of deflation, as measured by the CPI – the Federal Reserve Bank of Atlanta maintains an interesting data series titled “Deflation Probabilities.”

As stated on the site:

Using estimates derived from Treasury Inflation-Protected Securities (TIPS) markets, described in a technical appendix, this weekly report provides two measures of the probability of consumer price index (CPI) deflation through 2018.

A chart shows the trends of the probabilities.  As one can see in the chart, the readings are volatile.

As for the current weekly reading, the October 15, 2014 update states the following:

The 2013–18 deflation probability—based on the 5-year TIPS issued in April 2013 and the 10-year TIPS issued in July 2008—was 0 percent on October 15, where it has been since early September 2013. The 2014–19 deflation probability is also 0 percent as of October 15.

Prices of Treasury Inflation-Protected Securities (TIPS) with similar maturity dates can be used to measure probabilities of a net decline in the consumer price index over the five-year period starting in early 2013 or the five-year period starting in early 2014.

I plan on providing updates to this measure on a regular interval.

_________

I post various economic indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1886.40 this post is written

A Chart Of Recent S&P500 Price Volatility – October 17,2014 Update

This post is an update to past posts regarding stock market volatility.

While I track many different measures of volatility, I find the following chart to be both simple and clear in depicting the recent increased volatility in the stock market.

Overall, my analyses indicates that there are many reasons for this volatility, and the volatility is very notable and has great significance.

This chart depicts the S&P500 in 60 minute intervals from September 1, 2014 through yesterday’s (October 16) close.   The blue line depicts a 50-period (hour) moving average.

(click on chart to enlarge image)(chart courtesy of StockCharts.com)

S&P500 hourly since September 1, 2014

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1862.76 as this post is written

Disturbing Charts (Update 16)

I find the following charts to be disturbing.   These charts would be disturbing at any point in the economic cycle; that they (on average) depict such a tenuous situation now – 64 months after the official (as per the September 20, 2010 NBER BCDC announcement) June 2009 end of the recession – is especially notable.

These charts raise a lot of questions.  As well, they highlight the “atypical” nature of our economic situation from a long-term historical perspective.

All of these charts are from the Federal Reserve, and represent the most recently updated data.

The following nine charts are from the St. Louis Federal Reserve:

(click on charts to enlarge images)

Housing starts (last updated 9-18-14):

housing starts

The Federal Deficit (last updated 10-15-14):

U.S. Federal Deficit

Federal Net Outlays (last updated 10-15-14):

Federal Government outlays

State & Local Personal Income Tax Receipts  (% Change from Year Ago)(last updated 7-30-14):

ASLPITAX Percent Change From Year Ago

Total Loans and Leases of Commercial Banks (% Change from Year Ago)(last updated 10-10-14):

Total Loans and Leases Percent Change From Year Ago

Bank Credit – All Commercial Banks (% Change from Year Ago)(last updated 10-10-14):

Total Loans and Leases Percent Change From Year Ago

M1 Money Multiplier (last updated 10-9-14):

Money Multiplier

Median Duration of Unemployment (last updated 10-3-14):

median duration of unemployment

Labor Force Participation Rate (last updated 10-3-14):

labor force participation rate

This last chart is of the Chicago Fed National Activity Index (CFNAI, and its 3-month moving average CFNAI-MA3) and it depicts broad-based economic activity (last updated 9-22-14):

Chicago Fed National Activity Index

I will continue to update these charts on an intermittent basis as they deserve close monitoring…

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1862.76 as this post is written

Chicago Fed National Financial Conditions Index (NFCI)

The St. Louis Fed’s Financial Stress Index (STLFSI) is one index that is supposed to measure stress in the financial system.  Its reading as of the October 16, 2014 update (reflecting data through October 10) is -1.065.

Of course, there are a variety of other measures and indices that are supposed to measure financial stress and other related issues, both from the Federal Reserve as well as from private sources.

Two other indices that I regularly monitor include the Chicago Fed National Financial Conditions Index (NFCI) as well as the Chicago Fed Adjusted National Financial Conditions Index (ANFCI).

Here are summary descriptions of each, as seen in FRED:

The National Financial Conditions Index (NFCI) measures risk, liquidity and leverage in money markets and debt and equity markets as well as in the traditional and “shadow” banking systems. Positive values of the NFCI indicate financial conditions that are tighter than average, while negative values indicate financial conditions that are looser than average.

The adjusted NFCI (ANFCI). This index isolates a component of financial conditions uncorrelated with economic conditions to provide an update on how financial conditions compare with current economic conditions.

For further information, please visit the Federal Reserve Bank of Chicago’s web site:

http://www.chicagofed.org/webpages/publications/nfci/index.cfm

Below are the most recently updated charts of the NFCI and ANFCI, respectively.

The NFCI chart below was last updated on October 16, incorporating data from January 5,1973 to October 10, 2014, on a weekly basis.  The October 10, 2014 value is -.86:

(click on chart to enlarge image)

NFCI chart

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 16, 2014:

http://research.stlouisfed.org/fred2/series/NFCI

The ANFCI chart below was last updated on October 16, incorporating data from January 5,1973 to October 10, 2014, on a weekly basis.  The October 10, 2014 value is -.50:

ANFCI chart

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 16, 2014:

http://research.stlouisfed.org/fred2/series/ANFCI

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1867.29 as this post is written

Trends Of U.S. Treasury Yields

For references purposes, below are two charts that show the trend in interest rates for various Treasuries, including the 3-Month, 2-Year, 5-Year, 7-Year, and 10-Year.  Of note, yesterday the yield on the 10-Year Treasury fell below 2% on an intraday basis, but closed at 2.09%.

A chart showing the interest rate trends of the last 20 years:

(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)

interest rates on U.S. Treasuries

A chart showing the interest rate trends of the last year:

(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)

Treasury security yields

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1862.49 as this post is written

CEO Confidence Surveys 3Q 2014 – Notable Excerpts

On October 8, 2014, The Conference Board and PwC released the 3rd Quarter Measure Of CEO Confidence.   The overall measure of CEO Confidence was at 59, down from 62 in the second quarter. [note:  a reading of more than 50 points reflects more positive than negative responses]

Notable excerpts from this October 8 Press Release include:

CEOs’ assessment of current economic conditions, however, was more positive. Now, approximately 52 percent claim conditions are better compared to six months ago, up from 46 percent in the second quarter of 2014. Conversely, business leaders’ appraisal of conditions in their own industries declined, with just 41 percent saying conditions in their own industries have improved, compared with 48 percent last quarter.

CEOs’ expectations regarding the short-term outlook were less optimistic. Slightly more than 44 percent of business leaders anticipate economic conditions will improve over the next six months, down from 53 percent last quarter. However, nearly 51 percent expect conditions to remain the same. Expectations for their own industries are also more subdued, with 34 percent anticipating an improvement, down from 46 percent in the second quarter. About 51 percent expect no change in conditions.

The Business Roundtable also released its CEO Economic Outlook Survey for the 3rd Quarter of 2014 last month.   Notable excerpts from the September 16 release, titled “CEOs See U.S. Economy Underperforming in Next Six Months”:

The Business Roundtable third quarter 2014 CEO Economic Outlook Index ‒ which provides a picture of the future direction of the U.S. economy based upon CEOs’ plans for sales, capital spending and hiring ‒ declined moderately from the second quarter. Results show plans for capital expenditures, hiring and sales all decreased relative to the previous quarter, with hiring plans declining the most.

also:

CEOs expect 2014 gross domestic product growth of 2.4 percent, roughly the same as last quarter’s estimate of 2.3 percent.

also:

The Business Roundtable CEO Economic Outlook Index – a composite index of CEO expectations for the next six months of sales, capital spending and employment – decreased in the third quarter of 2014 to 86.4 from 95.4 in the second quarter of 2014. The long-term average of the Index is 80.2.

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1879.97 as this post is written