FactSet Earnings Insight: First Quarter Earnings in Review

The FactSet Earnings Insight report provides summary statistics for the latest trends in the earnings of the S&P 500 companies. The dynamic paper that is constantly updated to stay with the most recent earnings trends addresses earnings estimates, earnings guidance, revenues, and more. The report is available here and will remain updated on that link, so be sure to check back every quarter to see the new data posted by FactSet.

From FactSet
Earnings season for the first quarter of 2018 is coming to a close with 93 percent of S&P 500 companies having already reported. Looking back, the first earnings season of the year proved to be a success despite broad volatile trading. According to FactSet, 78 percent of S&P 500 companies reported a positive EPS surprise and 77 percent reported a positive sales surprise. If the 78 percent number holds, it will be the highest recorded by FactSet So far, on average companies are posting earnings 7.5 percent above what is expected. This s…

2018 Rating Global Leaders: Trump's Trade Policy Disappoints

Gallup is famous for its presidential approval rating surveys in the United States with numbers that are cited often by politicians in campaigns and interviews. The Rating World Leaders report is an expansion of that survey where Gallup opens up the question of approval to the rest of the world. Country-by-country, the survey determines approval ratings for almost every country in the world on an annual basis. In the 2018 report, the Trump administration is put on the stage. Here are some highlights of the report.

To start, here’s a visual of the world ratings which are represented as a percentage of individuals who “approve,” “don’t approve,” or abstain. The map above shows some interesting trends. The entirety of the Western hemisphere across the Atlantic Ocean is in red. The Trump administration’s insistence on reevaluating NAFTA probably must do a lot with disapproval in this area. However, the fact that there is no green is more telling than anything. Most of Europe is in red, w…

Quarterly Report on Federal Reserve Balance Sheet: Fed Diet Starts

Recently, the Federal Reserve released the March 2018 edition of the Quarterly Report on Federal Reserve Balance Sheet Developments a document that provides updates on the changes in assets and liabilities of the central bank and how they coexist with the changes in interest rate policy. With the FOMC announcing an interest rate increase at the first meeting led by the new chairman, Jerome Powell, some changes in open market operations are expected to be the result.
The February 28th, 2018 balance sheet was released at the end of March 28th and showed the result of the Federal Reserves first attempt at shrinking the balance sheet.

ItemChange (in billions)PercentTotal Assets-$68-1.5%U.S. Treasury securities-$41-1.7%mortgage-backed securities-$11-0.6%
The table above shows the two areas the Federal Reserve drew from (both included in the total asset draw). U.S. Treasuries were understandably the largest decrease on the asset side with an almost 2 percent decrease. Mortgage-backed securi…

Bureau of Economic Analysis' Personal Income and Outlays: Inflation Ticks Up

On Thursday, March 29th, the Bureau of Economic Analysis (BEA) released the monthly readings of personal income and outlays for the month of February 2018 as well as revisions of January 2018 numbers. Raw data from the past five months is published for personal income, disposable personal income, personal consumption expenditures and PCE price index.
Readings were mostly flat in February with personal income growing 0.4 percent for the third straight month and disposable personal income growing 0.4 percent as well after an abnormal January. The BEA noted that the increase in personal income was caused by "an increase in wages and salaries," an optimistic note as wage growth over the past couple of years has been much needed. Personal consumption expenditures remained growing at a 0.2 percent pace and continued to underperform the last three months of 2017 (although that might be due to seasonality trends). With tax reform passed, eyes will be on this number to grow as consu…

The "Reversal" Play: A Study of Company Size, Industry, and Sector

In technical analysis, the “reversal play” is a well-known strategy used by traders to take advantage of imbalances in momentum. The strategy roots itself in the idea of mean-reversion, large decreases in the share price of a stock are typically followed by a period of increases as the value roughly regresses to a mean. From a fundamental point of view, the investor assumes that a sudden spike in share price (which this data looks at) is not accompanied by an immediate fundamental change, therefore, the company has become undervalued.

This phenomenon has been heavily researched before showing that this strategy is capable of producing excess returns. Marc Bremer and Richard Sweeney in “Reversal of Large Stock-Price Decreases” (1991) found that “extremely large negative 10-day rates of return are followed on average by larger-than-expected positive rates of return over following days.” Bremer and Sweeney found that the recoveries they studied were relatively slow and “inconsistent with …

2018 Stock Market Outlook

It's January again, and that mean's another year of trading opens in 2018 closing out the 52 weeks assigned the 2017 label. A new year brings new investment opportunities and closes out others. Rallies and rotations look to be extended, but traders know anything can happen. In 2016, for example, the stocks welcomed investors into the new year with a 220 point drop in the S&P 500 before rebounding over 400 points to end the year in a rally. The rally continued, and 2017 did not disappoint.

Like a smooth ramp, the top 500 companies in the United States (the S&P 500) grew steadily this year breaking record after record. Only a few red days in April threatened to slow the rally, but those were easily trumped by the green days the followed. The S&P 500 returned 19 percent, the Dow Jones Industrial Average returned 25 percent, the NASDAQ returned 28 percent, and the passive investor once again grinned cheekily. The astonishing bullish sentiment has active investors scram…