Saturday, July 9, 2016 8:51 AM EST
Runnymede made one of the earliest calls on the corporate earnings recession in February of 2015. S&P earnings have been flat-out terrible for 5 of the last 6 quarters with double-digit declines. However, last quarter the S&P showed signs of turning the corner. Analysts had forecast 10% growth heading into the first quarter but companies still fell well short of that mark for essentially a flat quarter. As 2nd quarter earnings season kicks off, analysts are even more bullish with S&P reported earnings growth forecast at 15%. While we do not expect this number to be that great, if it can even show high single digit growth, it could very well prove to be a catalyst for stocks to hit new highs.
Likely to fall short again: Energy
Analysts are likely still too optimistic on oil. Even though prices have rebounded from the February lows, the comparisons will be tough from 2015. In June/July 2015, oil prices averaged $60; however this year prices were closer to $45. Third and fourth quarter comps should be much easier to beat and should finally show growth out of the energy sector as long as prices hold stable at current levels.
US Dollar no longer a headwind
Last year, the strong US Dollar proved to be a very tough headwind for earnings. This affected the multi-national corporations greatly. This will be the first quarter where the US Dollar will no longer be a factor since the Dollar has traded sideways since last year.
Are you bullish or bearish going into the second half of 2016? Please leave a comment below.
Disclosure: Please remember that past performance may not
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Disclosure: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Runnymede Capital Management, Inc.), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Runnymede Capital Management, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Runnymede Capital Management, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of Runnymede Capital Management, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.
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