One area that remains favorable is the confidence of the consumer and small business owner. In this week's release of the NFIB small business Optimism Index, optimism rose 1.6 points to 104.3. The survey notes six of the ten components rose, two were unchanged and only two declined. Small business owners' sales and earnings expectations improved significantly, sales up seven points and earnings tr...
In Tuesday's release of the Job Opening and Labor Turnover Survey (JOLTS) job openings declined 364,000 to 6.4 million. This is a decline in openings from a high level of 7.6 million reached in November 2018. The blue line in the below chart represents hires in December and this line continues to trend higher at a fairly steady pace. In other words the pace of hiring has not slowed.The number of u...
The strong return achieved by the S&P 500 Index in 2019, up 31.5%, occurred in an environment where earnings growth was nearly flat, i.e., up 1.7%. This flat rate of growth in earnings was below analyst expectations at the beginning of 2019. At that time I/B/E/S data from Refinitiv projected 2019 S&P 500 earnings to be up 7.2%. Consequently, the market's strong return in 2019 was driven almost ent...
On Friday, January 31, the S&P 500 Index fell 1.77% resulting in the year to date return for the month of January equaling a negative .16%. That Friday decline meant the Index's return was down 3.22% from the year's high. One common phrase that describes investor behavior of late is "buy the dip." Last week's market action, up four days in a row until Friday's decline, is evidence that this "buy t...
Last week S&P Dow Jones Indices announced the annual rebalancing of the Dividend Aristocrats. In the rebalancing results, no companies are being removed, but S&P announced seven new additions to the Aristocrats for 2020. This brings the number of Aristocrats to 64 companies. The changes go into effect prior to the market open on February 3, 2020. As noted by S&P, "S&P 500® Dividend Aristocrats® me...
The American Association of Individual Investors' Sentiment Survey release this week showed a continued trend towards more bullishness by individual investors. Bullish sentiment rose 3.8 percentage points to 45.6% and this is up from a low 21.4% in October of last year.The below chart shows the 12-month forward return (maroon line) at various bullish sentiment levels. It is when the bullish sentim...
Two years ago to the day on January 20, 2018 I wrote a post, Will The Stock Market Ever Decline Again?, and it seems in January 2020, investors are faced with the same question. Written commentary today is mirroring commentary of two years ago as January's market has gotten off to a strong start just like in 2018. Historically, strong starts to a January are a positive predictor for market returns...
In August 2018 the NFIB Small Business Optimism Index hit a high of 108.8. Since then the NFIB Index has declined to 102.7 as reported in the December NFIB Small Business Optimism report today. In January 2018 though, the NFIB Index level was 101.2 and today's reading shows an improving trend. Noted in the December report was the fact "an increased number of small business owners reported better b...
In the fourth quarter of 2019 the S&P 500 Index rose nearly 10% in contrast to 2018 where the Index was down 13.5%. What a difference a year can make. Our Winter 2019 Investor Letter looks at the Decade of 2000's versus the Decade of 2010's and certainly the most recently completed one was rewarding to investors. As the new year and decade unfold the market will grapple with headlines associated w...
From time to time investors are faced with unanticipated shocks to the market. With tensions in the Middle East, and specifically Iran, elevated again, the market will undoubtedly react to events over the course of the next few days, weeks and months. Investors should know though, the shock and damage to the equity market from these shocks historically are short-lived.S&P Dow Jones Indices issued ...