S&P 500 consensus expected operating earnings for both 2018 and 2019 flattened out over the past few weeks after rising sharply in January and February during the Q4-2017 earnings season thanks to the Tax Cuts & Jobs Act (TCJA) enacted on December 22. They will probably resume their climb as companies start to report the initial positive impact of the TCJA during the current earnings season for Q1-2018. Forward earnings, i.e., the time-weighted average of consensus expected earnings for this year and next year, edged up to a fresh record high during the week of April 12. The Blue Angels chart shows that at the same time as forward earnings soared earlier this year, the forward P/E dropped sharply, resulting in a 10% correction. The market seems to have found support around a forward P/E of 16.0. (For more on forward earnings and Blue Angels, see Chapter 13 of my new book Predicting the Markets: A Professional Autobiography.)
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