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Showing posts from May, 2019

Global Liquidity Squeeze Has Weighed on Manufacturing: A BIS Presentation

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On May 14th, 2019, Hyun Song Shin, Economic Adviser and Head of Research at the Bank of International Settlements gave a presentation titled "What is Behind the Recent Slowdown?" His presentation presents an explanation on the global slowdown in manufacturing and trade and how the current economic environment has brought about a slowdown in activity.



Shin points out that manufacturing and trade have been a major drag over the past year with European countries seeing their purchasing managers' indices (PMIs) peak in  the beginning of 2018 and continue downwards into 2019. A similar trend can be seen in the US's PMI which saw its last April value come in below expectations. China's national PMI reading saw a slightly positive recovery in February but still remains relatively depressed like Europe and the US. Shin also points out this trend of weakened manufacturing is secular from domestic areas of growth like services and employment, particularly in Europe.



In a w…

FactSet Earnings Insight: 2019 First Quarter Earnings in Review

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The first earnings season of 2019 comes to a close with 90 percent of companies in the S&P 500 reporting.As FactSet continues to update its "FactSet Earnings Insight" report, here is a snapshot of 2019 Q1. Results were mostly positive as 76 percent saw a positive EPS surprise and 59 percent reported positive revenue surprise. While the current reports were somewhat optimistic, firms see negativity in the second quarter of 2019 as 65 reported negative EPS guidance and only 17 reported positive EPS guidance.

From FactSet
FactSet points out that there were concerns that a strong dollar and trade tensions would be a problem for earnings. Using FactSet Geographic Revenue Exposure data, the report shows that "globally exposed" S&P 500 companies which had more than 50 percent of sales outside of the US announced lower earnings and revenue growth. The trend was significant on the earnings side with the aggregate earnings of globally exposed firms dropping -12.8 per…

Small Businesses Stable in 2018

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The Small Business Credit Survey 2019 recently was released from the Federal Reserve of New York. The report surveyed small businesses in the second half of 2018 regarding various performance indicators and credit outcomes. It comes at a time where global growth concerns from major financial organizations have caused uncertainty in markets as well as hesitance from corporate leadership. In particular, this report documents the responses from 6,614 small businesses with 1-499 employees either full- or part-time.


Small businesses in 2018 reported a general improvement in fundamentals. More than half reported revenue growth in 2018 (57%) and a good amount added workers (37%). That leaves the indices for each of those categories up slightly in 2018. The only performance measure that struggled was profitability. While 57 percent reported operating "at a profit" this number did not grow in 2018. 
Profitability struggles characterized the year as small businesses were forced to gra…