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  • S&P 500's P/E Down To 16.1x: A Tale Of Two Markets [View article]
    Hi Lawrence,

    Thanks for the feedback. I will try and look into this and, if necessary, change the way I present this in the future.

    What do you think are the right projections for Q1 earnings growth for the S&P 500? And, what data provider do you think is best?

    Please note the following:

    The P/E of 16.1x used in the title is solely based on actual earnings and does not include Q1 projections. I presented a table explaining what this number is based on.

    Regarding the estimates, I wrote: "Please note that the last data points in the third and fourth graphs are estimates and will change as the numbers come in. The graphs show the expectations for growth, but it is too early to tell what the actual results will be."

    In previous articles I wrote that the estimates for 2013 and 2014 are very optimistic and will likely come down. I was thinking about saying the same thing again in this article but didn't want to be repetitive. I should have said it anyway.

    The point is that the S&P 500 has been experiencing multiple expansion (based on LTM earnings too). Although the current multiple is not high by historic standards, it is high relative to the immediate past. To justify this multiple, investors probably need to see earnings growth this quarter, after a few quarters of stagnation. It is important that Q1 earnings show growth compared to last year (and that there are reasons to believe there will be future growth too). It is less important that Q1 earnings hit the exact target from S&P.

    I also show forward earnings estimates for the top 100 companies, but these charts compare changes in estimates, not estimates to actual numbers.
    Apr 21, 2013. 09:44 PM | Likes Like |Link to Comment
  • S&P 500's P/E Down To 16.1x: A Tale Of Two Markets [View article]
    Hi Lawrence,

    All the data about the quarterly earnings numbers and estimates comes from the same source. The $25.40 estimate for Q1 2013 and $24.24 for Q1 2012 are for operating earnings.

    The 8.6% yoy growth is for "reported earnings," not operating earnings.

    Both the operating earnings and reported earnings come from the same source.
    Apr 21, 2013. 06:12 PM | Likes Like |Link to Comment
  • S&P 500's P/E Down To 16.1x: A Tale Of Two Markets [View article]
    Hi Fear&Greedtrader,

    Thanks. That is what I thought, but wanted to be clear. I may be wrong, but I will be wrong from the bullish side (at least for now).
    Apr 21, 2013. 05:03 PM | Likes Like |Link to Comment
  • S&P 500's P/E Down To 16.1x: A Tale Of Two Markets [View article]
    Hi,

    Not sure if that question was directed to me. I haven't called a top at any point recently. In fact, I have been saying that we were not going to face a summer slump like last year. I did become more cautious on Monday, but I said I was not bearish.

    I could be criticized for being on the bullish side over the last few weeks, but not for calling a top.
    Apr 21, 2013. 04:47 PM | Likes Like |Link to Comment
  • S&P 500's P/E Down To 16.1x: A Tale Of Two Markets [View article]
    Hi WDL,

    Thanks for the comments. The 50 day moving average is only one thing to look at. With everybody so focused on it now, I wonder if it will be less of a signal than many expect.

    Also, I would not describe the volatility as extreme. The market was very quite for a few months and volatility picked up a bit, but it is not at extreme levels. While this is true for the overall market, certainly the commodities have seen big price swings.
    Apr 21, 2013. 03:07 PM | Likes Like |Link to Comment
  • S&P 500's P/E Down To 16.1x: A Tale Of Two Markets [View article]
    Hi Stanley,

    Thanks for the comments. I am watching the downside, but continue to be cautiously bullish. I am working on another article about this now and it should be out tomorrow.

    Regarding the macro, the Fed is very supportive of the market and Europe is holding up well. Maybe the market needs to pause, but I am not expecting a risk-off move like last year.
    Apr 21, 2013. 03:02 PM | Likes Like |Link to Comment
  • Euro Strength Continues: Will Investors Rotate To European Assets? [View article]
    I am still watching and waiting on SAN. I want to find a reason to get in, but prefer to buy on strength. A small starter position does make sense. Good luck.
    Apr 17, 2013. 10:20 PM | Likes Like |Link to Comment
  • Euro Strength Continues: Will Investors Rotate To European Assets? [View article]
    Thanks. Very interesting.

    By the way, interesting to see Bullard's comments on QE in US and inflation:

    http://onforb.es/11wAmTw

    http://bit.ly/13jn019

    My view is that the only inflation that the Fed and other central banks really care about is wage inflation. However, the collapse in commodity markets is going to bring up some fears of deflation. This will probably help ECB with rate cuts and European style QE.
    Apr 17, 2013. 04:04 PM | Likes Like |Link to Comment
  • Euro Strength Continues: Will Investors Rotate To European Assets? [View article]
    Thanks. Very interesting.

    By the way, interesting to see Bullard's comments on QE in US and inflation:

    http://onforb.es/11wAmTw

    http://bit.ly/13jn019

    My view is that the only inflation that the Fed and other central banks really care about is wage inflation. However, the collapse in commodity markets is going to bring up some fears of deflation. This will probably help ECB with rate cuts and European style QE.
    Apr 17, 2013. 04:04 PM | Likes Like |Link to Comment
  • Euro Strength Continues: Will Investors Rotate To European Assets? [View article]
    After gold and bitcoin, people need to put their money somewhere
    Apr 16, 2013. 09:30 AM | Likes Like |Link to Comment
  • Euro Strength Continues: Will Investors Rotate To European Assets? [View article]
    Hi, thanks for the comments. Euro having another good day today.
    Apr 16, 2013. 09:18 AM | Likes Like |Link to Comment
  • Cautious, Not Bearish, After Monday's S&P 500 Price Action [View article]
    Hi Michael,

    Thanks for the comment. Could be, I will be watching.
    Apr 16, 2013. 08:41 AM | Likes Like |Link to Comment
  • Euro Strength Continues: Will Investors Rotate To European Assets? [View article]
    Hi Stephen,

    Thanks for the comments and agree with many points. I am wondering if the ECB will be reluctant to do something close to the German election (like the Fed doesn't like to act before the US elections). This could mean they hold off until after or do something soon to avoid acting close to the voting.

    I agree that they will do QE of some sorts and probably cut the rate at some point. The rate cut won't have much of an impact on the economy, but would be nice. As you say, they should throw the kitchen sink at the problem, but that is probably a low likelihood.

    The fact that the ECB doesn't have employment mandate is a problem, but they will probably do something anyway.
    Apr 15, 2013. 07:31 PM | Likes Like |Link to Comment
  • S&P 500's P/E Rises To 16.4x As Q1 Results Start Coming In [View article]
    Hi,

    Yes, there are always two sides. My small energy exposure (which is now smaller) is mainly in natural gas plays and not oil. What do you think about natural gas now?
    Apr 15, 2013. 01:50 PM | Likes Like |Link to Comment
  • S&P 500's P/E Rises To 16.4x As Q1 Results Start Coming In [View article]
    Update: I mentioned in the article that I had been adding to my energy exposure. With the price action today, I cut that exposure. I continue to think there may be opportunities on the natural gas side if its price continues to hold up above $4. However, all the commodities are getting hit today (thanks Gold speculators!), so I am being more cautious. It will be interesting to see what happens to XOM's estimates going forward. I will include updates about this in my future articles.
    Apr 15, 2013. 01:18 PM | Likes Like |Link to Comment
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