Earnings Season Takeaways

LPL Research writes, “Earnings season delivered as expected. With 92% of results for S&P 500 Index companies in the books, first quarter 2019 earnings are tracking to roughly flat with the prior year [Figure 1]. While flat earnings don’t sound impressive, we consider it a victory given consensus estimates were calling for a 4–5% decline when earnings season began (source: FactSet). Here, we recap the numbers and provide some key takeaways from earnings season.” Key takeaways include: We consider first quarter earnings season a success based on the upside surprise and resilience of estimates for the rest of this year. It appears an earnings recession has been averted and better earnings days lie ahead, though trade uncertainty is a huge wild card. Our base case remains that we will get a trade deal with China early this summer and consensus expectations for S&P 500 earnings growth in 2019 of 3–4% may prove to be conservative. Read more from John Lynch Chief Investment Strategist, and Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial.

Stocks Reach Record Highs

LPL Research writes that “Stocks reached new highs last week. The S&P 500 Index completed a V-shaped recovery last week to register its first record high since September 20, 2018, to close at 2933.68 on April 23.  Here we share our thoughts on what this record could mean for stocks going forward.” Key takeaways include: The S&P 500’s new record high set last week ended a more than 7-month drought without one. History tells us that new highs should be celebrated, not feared. Even though the market may be due for a pullback, we think stocks will be higher at year end. Read more here from John Lynch, Chief Investment Strategist, and Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial.

Worried About A Recession?

April 17, 2019 | posted in: Blog, Financial Insights | by

According to Burth White and the team at LPL Research, that concern may be unfounded. Read why here.

QI Earnings Preview: Light at the End of the Tunnel

LPL Research tells us that “First quarter earnings season kicks off this week and the bar seems low. Consensus estimates for first quarter earnings season are calling for a slight yearover-year decline in S&P 500 Index earnings amid the economic soft patch at the start of the year. Marking the one-year anniversary of the tax reform earnings boost, in the first quarter of 2018, has made the annual comparison more difficult, [as shown in Figure 1 in link]. We expect roughly flat earnings for the quarter, but the streak of seven straight quarters of earnings growth could come to an end. Here we preview the upcoming earnings season, highlight some key themes, and share some thoughts on the 2019 corporate profit outlook.”  The short version:  flat earnings may be the best case scenario for Q1 earnings, but there is light at the end of the tunnel, with growth likely ahead. Key takeaways include: We expect roughly flat earnings for the first quarter, putting the seven-quarter streak of growth in jeopardy. The picture seems quite a bit better when looking beyond the first quarter, which we see as a trough in growth. We expect enough economic growth ahead to drive record profits in 2019, supported by fiscal stimulus, robust manufacturing output, healthy labor markets, and a U.S.-China trade deal. Read more here from John Lynch Chief Investment Strategist, and Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial.

The Stock Market’s Final Four

LPL Research says, “The NCAA Final Four is set. On the men’s side, Auburn, Michigan State, Texas Tech, and Virginia are headed to Minneapolis to determine this year’s college basketball national champion. On the women’s side, UConn and Oregon punched their tickets over the weekend while the other two spots will be decided tonight—Baylor and Notre Dame are the favorites.  In that spirit, our weekly commentaries discuss our “Final Four Factors” for the markets and economy over the balance of the year. In today’s Weekly Market Commentary, we share our “Final Four Factors” for the stock market in 2019: policy, the economy, rates, and profits.” Click here to read more from John Lynch Chief Investment Strategist, and Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial.

Guess What We’re Celebrating Today!!

March 14, 2019 | posted in: Blog, Frye Happenings | by

It’s only fitting, on National Pi Day!