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Forward S&P 500 Earnings Still Moving The Right Direction

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The thought is to start this weekend’s S&P 500 earnings update with the y/y growth rates for Q3 ’20 through Q2 ’21:

Readers should note the improving growth rates in Q3 ’20, Q4 ’20 and Q1 ’21 EPS and the the minor improvements in the same quarter’s expected revenue growth.

Bank earnings this week undoubtedly helped the 3rd quarter EPS numbers, although the bank stocks and financials didn’t do much on the week. (I’m starting to think Jim “RevShark” Deporre over at RealMoney has the banks right – what a horribly frustrating trade.) A note out of Jefferies this week, noted that JPMorgan (NYSE:JPM) might be ready to repurchase stock in Q1 ’21. That ability is badly needed for the banks and Financials like Goldman Sachs (NYSE:GS), etc.

S&P 500‘s forward earnings curve:

Ignore the shaded area, that’s a snafu, but readers can look at the sequential and 4-week rates of change rows and see the estimates continue to progress nicely.

S&P 500 earnings data (by the numbers):

  • The forward 4-quarter estimate rose this week to $156.78 from $156.08 last week.
  • The forward PE ratio is 22x.
  • The forward S&P 500 earnings yield is 4.50%, still pretty low relative to the last 10 years.
  • The 2020-2021 “expected” average EPS growth over the next two years actually slipped to 3% this week, after a remarkable streak of 27 weeks averaging 4%.

Summary/conclusion: The regular pattern that’s been in place for S&P 500 earnings since last Spring remains in place, particularly the sequential increases in week-to-week estimates.

As talk of a Biden “Blue Wave” gains in the media (and very few in the media happen to mention that at this same point in October 2016; Hillary Clinton held a 14% lead over President Trump), readers should assume higher taxes will be the result of a Biden presidency and a Blue Senate.

The Vice Presidential debate crystalized that for me when Senator Harris said that the corporate tax rate would be raised, as would the personal income tax reductions and the cap gains tax cuts (all restored to prior levels).

There is always a difference between campaigning and governing, so we’ll see what Congress comes up with if the vote math works, but Biden has noted that a 28% corporate tax rate is a possibility, versus the 20%-21% today post TC&JA.

In terms of the current 2021 S&P 500 EPS estimate of $165.83, if President Biden gets his wish, that would likely ultimately bring the 2021 S&P 500 estimate back down to the low $150s, depending on what else happens around the effective tax rate for corporate America in 2021.

That’s my biggest worry for next year.

Thanks for reading. Take all the EPS data and the math and the extrapolations with a grain of salt. The current trend in S&P 500 estimates still tells me that it’s the President’s race to lose, but 2016’s surprise should be enough evidence for everyone to want to ignore the polls and just get out and vote.

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Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.





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European stock futures slump 2% on report France mulling national lockdown By Reuters

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© Reuters. The German share price index DAX graph at the stock exchange in Frankfurt

(Reuters) – European stock futures dropped to a fresh five-month low on Wednesday after a report France was mulling a month-long national lockdown to combat a surge in coronavirus infections.

Euro Stoxx 50 futures () were off 2% at 0728 GMT, while German DAX futures () shed 1.9% and UK’s futures () dropped 1.4%. Wall Street futures were down about 1%.

French President Emmanuel Macron will give a televised address later in the evening, his office said.

Europe’s third-largest economy reported 523 new deaths from coronavirus over the past 24 hours, the highest daily toll since April 22, while United Kingdom recorded 367 deaths on Tuesday, the highest daily toll since May 27.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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European Stocks Seen Lower; Virus Prompts Lockdown Fears By Investing.com

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© Reuters.

By Peter Nurse

Investing.com – European stock markets are seen opening lower Wednesday on worries about the damage to the region’s economies caused by a second wave of shutdowns to combat the surge in Covid-19 cases.

At 2:00 AM ET (0700 GMT), the contract in Germany traded 0.3% lower, in France dropped 1.4% and the contract in the UK fell 0.8%. 

Europe continues to be hit hard with the second wave of the virus, with many of the region’s countries reporting soaring infection rates, not helped by the onset of cold, damp winter weather.

Restrictions imposed to try and combat the pandemic have had a limited effect to date, prompting fears of more draconian measures.

French President Emmanuel Macron is set to give a televised address on Wednesday evening, with local media reporting that the government is considering imposing a lockdown from midnight on Thursday.

Similarly, the Belgian government will convene on Friday to decide on a potential new national lockdown, while Spain has already announced a state of emergency for six months.

In corporate news, Deutsche Bank (DE:) will be in focus after the troubled bank returned to quarterly profit, helped by a strong performance from its investment banking arm.

Additionally, Reuters reported that U.S. jeweler Tiffany (NYSE:) and French luxury goods giant LVMH (PA:) are in talks to settle their dispute over a $16 billion takeover at a price slightly lower than that initially agreed.

Oil prices slumped Wednesday, as a jump in stocks, coupled with the potential damage to demand from the incessant increase in Covid-19 cases, raised worries about a supply glut.

Data from the late Tuesday showed a build of 4.577 million barrels for the week ending Oct. 23, more than the 1.2 million barrels expected, while gasoline inventories also rose. Government are expected later Wednesday.

Oil had rallied on Tuesday, with the contract climbing nearly 2% and the WTI version 2.6%, after a significant portion of U.S. Gulf output was shuttered ahead of the arrival of Hurricane Zeta, which is expected to make landfall in Louisiana later Wednesday.

U.S. crude futures traded 2.6% lower at $38.55 a barrel, while the international benchmark Brent contract fell 1.6% to $40.95. 

Elsewhere, fell 0.2% to $1,908.05/oz, while traded 0.2% lower at 1.1775.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Italy’s antitrust probes Google for possible abuse of dominant position By Reuters

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© Reuters. FILE PHOTO: Logo of Google is seen in Davos

ROME (Reuters) – Italy’s antitrust said on Wednesday it was probing Google (O:) for a possible abuse of dominant position in the Italian market of display advertising.

The regulator said that thanks to its position in the online advertising market, the company “uses in a discriminatory way enormous amounts of data, collected through its own applications, impeding other competitor operators to compete in an effective way”.

The authority added that it had carried out, with Italy’s Finance police, inspections in some Google offices on Tuesday.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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