|Period||S&P 500 Total|
(Source: Refinitiv IBES)
Thanks to Tajinder Dhillon, part of David Aurelio’s team at Refinitiv IBES, the old Thomson Reuters Financial and Data Group, this blog got a look at historical “annual” revenue growth for the S&P 500 since 2012. (See attached table. For some strange reason, Refinitiv doesn’t have annual S&P 500 revenue growth back further than that.)
Readers can see that 2018 will be strongest year of annual revenue growth of the past 7 years. 2019 is expected to see slower revenue growth, but still positive.
In 2014-2015 that drop from +3% to -3% was likely due to Energy and the stronger US dollar. It was in late August 2014 that crude oil started to become unglued, tumbling from $90 to $28 by late January ’16. For some reason, it caused a spike in the US dollar from October ’14 to March ’15, one of the most rapid periods of dollar strengthening for a 6-month period ever.
The dollar has been well bid in 2018 despite the equity market weakness of late. Crude oil has been soft too. I haven’t figured out the relationship there, i.e., every time crude oil starts to weaken, the dollar seems to firm, or if there is even “causality” present between the two assets.
Summary: Given the strength in S&P 500 revenue growth, still much stronger than the period from 2010 through 2016, I don't think this volatility we are seeing is S&P 500 earnings- or revenue-related.
However, take all opinions with a grain of salt.
2019 has been expected to be slower for a while - the consensus estimates for 2019 have been looking for 10% earnings growth for the S&P 500 for the last 12 months.
Just putting the data out there - writing helps me think through the issues. It also eases market-related anxiety.
Thanks for reading.