What’s wrong with this picture?
Latest financial press headlines, as published in Reuters*
- “Dimming growth prospects send stocks, oil plunging”
- “Retail warnings, tech tumble hit Wall Street”
- “Target shares tumble after profit miss, big jump in inventories”
- “Oil slumps 7 percent as equities slide fuels demand worries”
And for an alternative view, what follows is today’s reality…
According to The Wall Street Journal; Forward-looking Price to earnings ratio is 16.7 times. A year ago it was 24.4 times. **
According to SP Indices a Division of McGraw Hill**:
- Year over year earnings growth 2017 – 2018 = 26% Growth
- Year over year earnings growth 2018 – 2019 = 12% Growth
- Operating Margins at a record 11.96%, up 3.51% Q3/Q2 — 20-year average is 8.08%
(helped by higher EPS increases than sales increases)
Economic Growth – Opinion: Keep on keeping on; looks great.
Real gross domestic product (GDP) increased 3.5 percent in the third quarter of 2018, according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter of 2018, real GDP increased 4.2 percent.
Employment – Opinion: shortages of skilled labor in manufacturing is raising wages.
Unemployment rate 3.7% – 50 years average 4.2%****
Inflation – Opinion: The Federal Reserve does not have a reason to raise interest rates.
50 year average 4.0, now at 2.0% *****
Personal Net worth – Opinion: And the trend is early, more to come.
Net worth of U.S. households is at the highest level in our history reaching 106.9 billion up 8 billion since the same time last year.******
Corporate Balance sheet – Opinion: plenty of headroom for further expansion without increasing risk.
Accounts for about 32% of the market value of corporate entities down from approximately 70% in 2009.*******
Personal balance sheets – Opinion: It will probably get worse in the next few years.
Consumer debt represents 5.6% of disposable income: they bottomed in 2012 at about 5% down from a high of 6.7 in 2001. ********
U.S. Oil Production – : Opinion: I told you this was going to happen it will only increase over time. It will bring more manufacturing to our shores.
The US now largest oil producer – production growth since 2015 26.2%
“The United States likely surpassed Russia and Saudi Arabia to become the world’s largest crude oil producer earlier this year, based on preliminary estimates in EIA’s Short-Term Energy Outlook (STEO). In February, U.S. crude oil production exceeded that of Saudi Arabia for the first time in more than two decades. In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999.” *********
Poverty level US and Worldwide – Opinion: The reduction in poverty is capitalism’s greatest gift to humanity.
World Bank Group President Jim Yong Kim said – “Over the last 25 years, more than a billion people have lifted themselves out of extreme poverty, and the global poverty rate is now lower than it has ever been in recorded history. This is one of the greatest human achievements of our time,”… **********
Let’s be thankful this Thanksgiving for all the gifts that a free and productive society brings to our families, our communities, America and thus, the world.
Not much wrong with the current picture that a little silence couldn’t cure.
Take a look at My-Risk-O-Meter a new tool from Windsor Wealth.
Currently, some of our portfolios exhibit proportionately higher cash balances than normal. Our portfolios are overweighted in domestic equities.
Carlos Dominguez – Portfolio Manager, RJFS
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The preceding information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Carlos Dominguez and not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Investing always involves risk. There is no assurance that any investment strategy will be successful.The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.