The market is worried about politics, earnings: Market strategist
The market is worried about politics, earnings: Market strategist Greenbriar Halloween pictures or that you heard and apple, is having its results. Tomorrow. Apple is expected to report strong numbers and there’s the Facebook earnings at a dollar 76 on 13.73 billion cfra research to see you estimates for Q3, but actually 9 of the 11 sectors. In the S & P, 500 have seen their earnings estimates increased instead of being around twenty one and a half percent growth we’re now looking for about 25 % growth in the third quarter. Exactly a question about an earnings Peak is still out there because take a look at full year. 2019 estimates and the reverse is true. 9 of 11 have seen their earnings estimates come down. So what was about a 10 % earnings? Growth is now estimated about 9.3 %, that expected to be up about 8.9 %. For this year, growth is expected to be around 6 %, so 43 % of expectations, 43 % compared to 18 % in the same period in the last quarter. So again, earnings growth because of the tax cut the benefit there to Corporation rattled. I think it’s one of the reasons I’m saying that the market is worried about politics and earnings, so the politics interns, obviously of the China trade situation, politics in terms of midterm elections. Also, you can throw in there that, even though they’re supposed to be independent from politics, obviously with the president made in making statements about his displeasure with the direction of interest rates, that sort of adds to it all and then the earnings picture, because we are expected To be entering into a declining rate of growth, mainly because the comparisons are going to be even more challenging as we go into 2019 cuz, the bar has been set so high. I think investors are are saying and repeating that Michelob commercial – it can get any better than this 8 % 8.9 %, and then four 2019 earnings right now expected to be up 9.3 % and revenues up 6 %. I’M so can what can investors expect right so for next year on the year we could say – or we could end up slightly above – where we’re at maybe 2700 – maybe 2800 – on the S & P 500, but next year. What should I be getting an equity returns? What’S happening right now, as we are seeing an adjustment of that acceleration readjusting our expectations for the year ahead, then you want to be less optimistic that the price to earnings multiple should be coming down right now, we’re looking at about 15.8 times coming 12 month earnings, The average is 16.4, the median is about where we are right now. So the question then comes down to have we adjusted 2019 earnings enough? Do they need to come down even more, so I would tend to say that that’s the jockeying that will be taking place over the next several months as people to say Willow. How much will we be seeing truly and growth next year or how much do we need to cut? We also sell elections in Germany over way over the weekend, which Angela merkel’s party lost so much power that she said she’s not running for reelection huge changes in Europe, especially as we come to the end of the brexit negotiations outside of the US. How much of these directions to UC continuing to affect our markets, maybe less affecting our markets But continuing to affect their markets? I mean when it comes to political change. You can only think of one word uncertainty and that’s typically, I we end up with the second and third quarters of midterm election years. Posting average declines in price. We didn’t get that this year. This is the first time since World War II that we had all six of those months in positive territory, so we ended up getting it all in I’ve raised the issue that the one of those concerned about the midterms as a reason that the market sold off In the month October, however, were really concerned about kind of the left-leaning raise your tag, the policy’s being put into place. You would have seen the market really fell off during the summer, when the Democrats certainly had more of an edge in the house and more of an edge overall than the Republicans did, because it was in the month of September, really turn the tide for the Republicans And then you got the stock market sell-off. That would make sense. Logically. So it’s there something else: a foot here. Maybe Opera Company talk about Clorox this morning, they’re down 5 % because they’re talking about cost pressures and how FX is going to impact our sales in overseas markets to see the dollar as the overhang or is it is it? Is it the political environment, the dollar overhang more of that total uncertainty, because people are are well-versed in what typically happens before midterm elections and then what typically happens after 18 of 18 years, the market was higher 12 months later. We’Ve all been told that for quite some time I think, however, that may be the political scenario was an excuse, but I really think that the biggest uncertainly did come from and what kind of forward pressure CFRA Research Chief Investment Strategist Sam Stovall on the state of the markets.