In a BofAML released today and entitled A Year Ahead Forecast So Bullish, It’s Bearish, analysts draw three main conclusions: S&P 500 expected to climb to 2800 next year, despite sharp mid-year correction; inflation could be a global game-changer for stock and credit markets, and global economic growth accelerates,while the U.S. GDP capped by productivity and wages
US companies’ profits have exceeded forecasts by 4.6%, the European ones by 2% and Japanese firms by 6.7%. This has fuelled a strong rally in the stock markets in just a few weeks. But is there room for the markets to rise further?
There no asset which is safe, liquid and provides a good return all at the same time, since these variables usually go in the opposite direction; gold has an extremely high VIX or volatility index and it sometimes exceeds the Standard & Poor 500 index.
Making judgements on “whether a market is expensive or cheap,” using aggregates of prices and earnings, is a very risky simplification. To begin with, there are companies which don’t make money or even lose it, and quite a lot of it. Responsible, professional investors don’t buy stock markets indices, they buy shares. They don’t invest “top-down” but rather “bottom-up”.
Market commentators tell us that the price of Brent crude is dropping and indices like the S&P 500 and the Ibex 35 are falling. The reverse should be the case. Have we not been told that Spain has benefited from the decline in raw material prices? This cuts import prices, increases export margins, reduces pressure on wages etc. But it’s not the case. Oil prices have been tumbling for the last year, and whenever these begin start to tremble so do the stock markets.
BARCLAYS | We have pursued two apparently unrelated topics in our recent research. One topic has been the identification of fundamental traits that have the best track record of making stocks outperform. Some of these are counterintuitive. For example, the stocks of companies with high profit margins have underperformed the stocks of companies with low profit margins over the past 15 years
The Corner | April 24, 2015 | The Nasdaq closed on Thursday at an all-time high, surpassing record set 15 years ago, at the very dot com boom. But while US equities have been supported by positive earnings, the current market environment is very different from the late 90s.
The Corner | March 30, 2015 | While much of the attention is focused on bonds, it should also be noted that stocks and real estate market are also worth more. How much? Bankinter analysts forecast that Spain’s Ibex will reach 12,878 points (potential + 12%) in 2015; EuroStoxx50, 4,338 (+ 18%); S&P 500, 2,333 (+ 10%). The Japanese Nikkei remains the least attractive option at 20.305 (+ 4%).
WASHINGTON D.C. | March 18, 2015 | By Pablo Pardo | On December 19, 2008, George W. Bush announced that the US would allocate $13.4 billion to rescue General Motors. Between April 22 and June 1, 2009, Barack Obama provided the company with $36.1. In the end, the state ended up with a 61% of the stake of what is still the second largest car manufacturer in the world.
MADRID | The Corner | We’re in the middle of second-quarter earnings season and companies are showing their cards to investors. Note the difference on both sides of the Atlantic: in the US, 53% of S&P500 firms have posted their results and 78% have performed better than expected (average surprise of 6%, JP Morgan analysts pointed out). EPS growth is of 11% yoy, while sales went up by 5% with 67% of companies having better than expected numbers. Meanwhile in Europe, with 152 SXXP companies having posted their results, 56% have turned in an average +0.4% EPS. Year-on-year EPS has risen by 18% (8% if we exclude financial entities), although yoy sales decreased by -2%.