Monday, February 20, 2017
Sunday, February 12, 2017
To better understand what is and is not working in both of these ETFs, following is a summary of the sector attribution for both investments.
- The consumer staples weighting is nine percentage points higher than in the S&P 500 Index. This added 21 basis points to the overall outperformance.
- the utility sector is 19 percentage overweight versus the S&P 500 Index and this added 17 basis points to the outperformance
- SHLV contains no energy stocks and this added a small 3 basis points
- the financial sector is 15 percentage poitns overweight compared to the S&P 500 Index and this added 30 basis points to its outperformance
- SPHB is 20 basis overweight to the S&P index and this resulted in a negative 44 basis point versu the S&P and noting SHLV contains no energy positions.
- SPHB is comprised of no consumer staples positions and this cost the index 10 basis points versus the S&P 500 Index and a full 1.68% versus the low volatility index, SHLV.
"At this point, the continued strength is starting to overcome the historical pattern for a post-inaugural pullback in the first month...The Bottom Line: It remains a bull market until proven otherwise [emphasis added]...and prices are still not showing any new signs of vulnerability as the test of upper trendline resistance begins."
Interesting chart from Bespoke - Yale survey shows institutional investors much more bullish than individuals... pic.twitter.com/CosCEF2ugv— Callum Thomas (@Callum_Thomas) February 12, 2017
Saturday, February 11, 2017
- Q4 '16 earnings are expected to increase 8.4% on a year over year basis. The financial sector is projected to show the strongest YOY growth at 20.8%
- Of the 357 companies in the S&P 500 that have reported earnings to date for Q4 2016, 68.3% have reported earnings above analyst expectations. This is above the long-term average of 64% and below the average over the past four quarters of 71%.
- 48.3% of companies have reported Q4 2016 revenue above analyst expectations. This is below the long-term average of 59% and below the average over the past four quarters of 51%. Revenue growth for Q4 '16 is estimated to equal 4.4% YOY.
Monday, February 06, 2017
Posted by Matt Woebkenberg at Monday, February 06, 2017
Sunday, February 05, 2017
Sunday, January 29, 2017
As further proof that the market does not move higher in a straight line, the CFRA report notes the S&P 500 Index incurred a year-to-date price decline in 83% of all up years since 1945.
- "during bull markets since 1945, the S&P 500 experienced a pullback (a decline of 5.0%-9.9%) once a year, on average,"
- "a correction (a 10% to 19.9% decline) every 2.8 years, and,"
- "a bear market (-20%+) every 4.7 years."
- "the S&P 500 suffered a YTD price decline in more than 80% of all years in which the S&P 500 recorded a positive annual performance since WWII."
By: Sam Stovall, Chief Investment Strategist
January 17, 2017
Saturday, January 28, 2017
Friday, January 27, 2017
The below chart shows that through the end of 2015, S&P 500 companies were contributing a similar percentage of revenue to capex as they were back in 1995 (6.495% in 2015 vs. 6.5% in 1995). This same percentage capex contribution, however, is now only covering 113.4% of depreciation, when it covered 132.73% at the end of 1995.
[Note: going back to 1980 or 1990 shows that companies are clearly investing significantly less in capex since then, but for the purposes of this post it was sufficient to show that it is relatively unchanged in the past twenty years.]
Amidst all of the worries about excessive share repurchases, companies have managed to reinvest the same portion of revenue. The difference is not that companies are investing less, but that a larger percentage of this capex is required as effectively maintenance capex. This is due, in part, to the divergence in the growth rates of Depreciation and Revenue that began at the end of 2012 (as seen below). This was initially offset by an increased reinvestment rate in 2014.
This is not to say that buybacks and dividends have not increased in recent years, but the increase does not appear to have come at the expense of reinvestment. Rather, much of it seems to have come from new debt issuance, but we do not necessarily view this as a bad thing. The below chart demonstrates that while Total Debt for S&P 500 companies has easily surpassed the previous 2008 peak, Net Debt is still well below the peak and Interest Expense is even lower.
Companies have taken advantage of cheap debt and large cash balances (much of which may be repatriated under new administration), they have not sacrificed reinvestment.
Thursday, January 26, 2017
Wednesday, January 25, 2017
"With the S&P 500 once again in record high territory, today's chart provides some perspective on the current rally by plotting all major S&P 500 rallies of the last 86 years. With the S&P 500 up 107% since its October 2011 lows (the 2011 correction resulted in a significant 19.4% decline), the current rally is above average in magnitude and the second longest rally since the Great Depression."
- A major stock market rally has been defined as a S&P 500 gain of 30% or more (following a correction of at least 15%).
- The S&P 500 was not adjusted for inflation or dividends.
- Selected rallies were labeled with the year in which they began.
- There are 252 trading days in a year (100 trading days equal about 4.8 calendar months).