As promised, it’s always good to step back occasionally and make darn sure we are not all being Lemurs (most known for following each other without thought) and gathering together, just before we go over the cliff….
Ok, so you are about to receive a blast of charts… we will code this post Forecast so we can go back and look at the “Forecasts” later….
Is the Market (S&P 500) Expensive?
This is the trailing PE (Price Earnings Ratio) the most macro valuation measure used from our Friends at Factset !
Green dotted line represents, 5 year average, and the dark dotted line represents the 10 year average….
Answer – Not cheap, but MAYBE not as frothy as it may feel at times (present party included) – certainly have been MUCH more expensive in the past…
Remember, tariff progress may release some pent up/held on the sidelines demand!
What Areas are PROJECTED to Grow in 2020
This is what analysts are PROJECTING/Forecasting (hence our coding for future review) for the year 2020!
Recent Losers are expected to be next years winners- i.e. Energy and Materials….
What happens if Tariff Agreements are not reached? Not being negative here but we must consider this could be better or worse!
Earnings Versus Market Price Movement
You hear us say all the time, Earnings are the ultimate driver of prices… and they are….
No one says this is easy…. Earnings have been flat, but markets up….
Theoretically this should not happen … UNLESS market participants expect future earnings growth as markets are forward looking.
How about the Consumer?
Recall the consumer drives over two thirds of the economy through spending in our consumer consumption economy….
A Happy Consumer = Spending Consumer
One of the many Consumer Sentiment Indicators… University of Michigan…
Steady as she goes!
Ok … you get the point, not too bad!
We could find something really hot and really cold, but these are the biggies from a high level!
Of course we did not forget the inverted yield curve and it’s recession predictiveness … we spoke about it here, here, here and here…. more to come…
Have a Great “Lemur Checkup” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Capital Market Thoughts … Reminder from Lead Newsletter Article of Q1 2022 … “Anatomy of a Slowdown”
With the gyrations of the Capital Markets as of late making headlines, we wanted to re-review our review (purposely a lot of reviewing…haha… ok digressing) of our lead article in our most recent Newsletter (Q1 2022) The Anatomy of a slowdown!
Here is a link to the Newsletter and my video explaining the lead article at the very beginning of the Video!
Anatomy of a Slowdown – Re Review
After large infusions of stimulus during the virus and associated lock downs, it should not come as a surprise that there would be a slowdown both economically and on an individual spending level as the stimulus subsided….
Capital Markets have sniffed this out and are trying to figure out the next speed of economic growth…
While Capital Markets and participants do their thing …. we wanted to remind ourselves and readers of a few facts from the Newsletter:
The most important items we want to convey are that near the very end of a recession/slowdown, the headlines are the worst, but the rewards are the greatest.
The average length of a recession is about 9-12 months, much longer than the most recent 2020 recession (-36%), and the Interest Rate Temper Tantrum slowdown of late 2018 (-19.9%) or the low Volatility (VIX) shake out of early 2018 (-12%) all shown here in the chart below!
Final Thoughts to Remember:
Have a Great “Re-review of Anatomy of a Recession” Day!
John A. Kvale CFA, CFP
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Posted in Earnings, Economy, Investing/Financial Planning, Market Comments, Retirement Planning
Tagged Anatomy of a Slowdown, Interest Rates, Recession, Slowdown