HORAN Capital Advisors

Tariffs, Stocks And Recessions

 April 9 2018     David Templeton
One truism investors know well is the fact the stock market does not perform well in a recession. The recent focus on implementation of tariffs on the U.S.'s largest trading country, China, have some concerned about escalation into an all out trade war and leading to an economic slowdown or recession. Google web search on the term 'Tariffs' has moved higher with the March 1 peak coinciding with th...

Not A Unique Equity Market: Higher Prices Ahead?

 April 5 2018     David Templeton
About a year and a half ago I wrote a post on the current equity market that broke out of a thirteen year trading range in 2013 and compared it to the bull markets of the 1950s and 1980s. A number of policy issues being pursued today have similarities to ones in those two decades and below is a brief summary of what I wrote then:"...potential commonality to the current market compared to those pri...

A More Challenging But Normal Equity Market

 April 2 2018     David Templeton
Before I left for a week of vacation at the end of March, the equity markets had begun to exhibit a higher level of volatility. This seems to occur more often than not around this time period each year. This heightened volatility was to the downside and I wrote a post before leaving town noting this was more typical market action. What has been so abnormal about the equity market over the past fiv...

Recent Equity Market Weakness A Symptom Of A More Normal Market

 March 24 2018     David Templeton
This past week was certainly a difficult one for the market and by default, a difficult one for investors. Most of the weakness occurred on the last two days of the week, which resulted in the week's return for the S&P 500 Index ending at a negative 5.98%.Even with the recent market weakness, on a total return basis, the S&P 500 Index is up over 18% since the beginning of 2017 and down just 2.76% ...

Improved Earnings Growth Expectations Broadly Reduce PEG Ratios

 March 15 2018     David Templeton
Before passage of The Tax Cuts and Jobs Act in December, earnings growth for the S&P 500 was expected to be low double digits in calendar year 2018. Since passage of tax reform, a significant improvement in earnings growth expectations has occurred. The below table shows I/B/E/S earnings growth expectations in October by sector and for the S&P 500 Index compared to expectations as of the end of la...

Near Record Small Business Optimism

 March 13 2018     David Templeton
Today the National Federation of Independent Business (NFIB) reported small businesses are showing unprecedented optimism. The NFIB Small Business Optimism Index was reported at 107.6, the second highest reading in the 45-year history of the Index. The highest reading recorded was 108.0 in 1983.According to NFIB's President and CEO, Juanita Duggan,“When small business owners have confidence and ce...

Bond Yield To Stock Yield Spread Sufficiently Wide To Challenge Stock Returns

 March 12 2018     David Templeton
A little over a year ago I noted the yield on the 10-year Treasury surpassed the dividend yield of the S&P 500 Index. With rising bond yields, there becomes a point when the bond yield is sufficiently high relative to the yield on stocks that bonds can challenge stock returns. In that earlier article I referenced a research article written by CFRA Research's Sam Stovall and titled, Rising Prices, ...

Individual Investors Favoring Technology Stocks

 March 11 2018     David Templeton
Periodically I review the most active stocks individual members of Better Investing indicate they are purchasing. A notable feature on the current list is the fact technology related stocks are dominating member purchases.Full File (xls)Additionally, after the market's close on Friday, I posted a tweet noting Fidelity customers' top purchases. Again, technology stocks are gaining the interest of F...

Sentiment And Economic Data Laying The Foundation For Higher Stock Prices

 March 9 2018     David Templeton
The headline number of an increase of 313,000 in February's non-farm payrolls this morning was big. This is the largest monthly increase since July 2016. The high end of consensus estimates was for a 230,000 increase in payrolls. December and January reports were also revised higher.In addition to the strong payroll report, estimated 12-month forward earnings growth is anything but disappointing. ...

Trade Deficit And Tariffs: It Is Complicated

 March 8 2018     David Templeton
President Donald Trump's announcement that he is instituting tariffs on imported steel and aluminum came as a surprise to some although reducing the trade deficit was one of his campaign promises. Dealing with the trade deficit issue is a complicated one since no one factor impacts trade. What is complicating a necessary discussion at the moment is the vitriol in which President Trump's tariff pro...
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