15 March 2016

Corporate profits - Too early to call an upturn.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

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17 February 2017

Earnings estimates stuck in low gear.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

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14 May 2017

Earnings forecasts: a short-term support for markets.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

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4 May 2016

Earnings forecasts: absence of a negative is not a positive.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

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28 September 2017

Earnings momentum – 2017 forecasts drifting slowly lower.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

Read more...
16 August 2017

Earnings momentum remains stable for now.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

Read more...
22 November 2016

Earnings revisions: Gap widens between U.S. equities and earnings forecasts.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

Read more...
16 January 2017

Earnings Revisions: Waiting for upgrades?.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

Read more...
3 March 2017

Earnings trends: Gap risk endures in US.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

Read more...
21 June 2017

Equity risks are rising: economic surprises turning lower.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

Read more...
17 July 2017

Fed policy: Don't forget your flip-flops.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

Read more...
12 September 2017

Interesting times for central bankers.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

Read more...
13 March 2017

Ready for the rollover?.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

Read more...
1 September 2016

UK economy and corporate profits: Refusing to follow forecasts.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

Read more...
24 October 2016

US and European earnings trends: Better to travel than to arrive.

Weakening trend in 2017 revisions indices evident since mid-year

One of the key drivers of equities during H1 2017 was the relatively strong level of earnings momentum in each of the US, UK and continental Europe. This was in some respects a carry-over from the surge in positive sentiment towards the end of 2016 but which now appears to have run its course. It is easy to forget that as recently as 18m ago, investors were anticipating a major calamity in China’s economy, sharply impacting sentiment in the basic industry and other cyclical sectors which in the event did not occur. However, the data now highlight a modestly declining trend in 2017 earnings forecasts since mid-year, even as economic sentiment remains robust.

Read more...
Sector report cover
21/09/2017
Illumination: Equity strategy and market outlook September 2017

In this month’s strategy piece, Alastair George believes resilient forecasts for profits growth in 2017 keep the equity bears at bay in the short term. Though a modest degree of weakness in consensus earnings forecasts has appeared recently, earnings growth for developed markets is still forecast to be close to 10% in 2017. However, valuations across credit and equity markets highlight the need for caution for the medium term. Risk premia remain, in our view, compressed by central bank policy and are at levels that are unusually low on a historical basis. For the euro, it is perhaps a Goldilocks era as the strength of the currency taps the brakes on exporting nations, allowing other eurozone members, where there is less inflationary pressure, to remain beneficiaries of ultra-loose monetary policy for longer. We expect the ECB to aim to maintain the euro close to current levels. We continue to believe portfolios should be cautiously positioned.

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