Financial Management vs Financial Advice

November 11, 2016

This post by Ben Carlson does a wonderful job of describing these two very distinct services

Link to article

“The world is freer, healthier, happier, cleaner, smarter, richer and more peaceful than it has ever been – (yet) nobody knows that. “ – Nick Murray

Earnings Recession Is Over

I typically comment on the performance of the S&P500 – a US stock market index that represents 500 US stocks of various industries and revenue size. Given the US is the largest single economy in the world, its proximity to Canada, the global nature of most of its industries and its stock market depth and breadth – it’s a pretty good indicator of the overall stock market. The US election results not-withstanding, there is an interesting trend worth noting.

As noted by First Trust analyst Bob Carey: from June 20th, 2014 to February 11th, 2016, the price of a barrel of crude oil went from $107.26 to $26.21 – a drop of 75.6%. The result was 2015 was the worst year for S&P 500 earnings since the financial crisis of 2008. This earnings recession continued to the first quarter of 2016.

From Febryary 11th to the end of Sept, oil gained 84.1% rising to $48.24 – ending the S&P 500 earnings recession.

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The media have been all over this earnings recession ( shall we call it a pause?) inciting continued fear of this bull market. Take no heed – this market has some room to run.

The 3rd quarter earnings should be out soon but the estimates from the Bloomberg chart will be pretty close. But look at next years estimates – notice something? If these estimates are anywhere close to reality, they should be a record number for earnings.

So Now what?

Trumps win continues the anti-establishment trend that started when Harper lost to Trudeau and when the UK voted to leave the European Economic Union. The average voter wants change – despite misgivings. So what is Trump saying that we can expect from his administration? His platform included US infrastructure spending of $1Trilion planned, tax cuts of $600 Billion resulting is the repatriation of money back to the US, which should help fund internal growth. The infrastructure spending and tax cuts will push the US Debt to GDP ratio to over 100% – which is a big number. The US $ however continues to be the global safe haven.

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