Monday, July 22, 2019

Earnings, Earnings, Earnings

Monday, July 22, 2019 - US earnings season officially kicked off last week and through yesterday approximately 15% of the S&P 500 has reported results for the second quarter. This earnings season draws particular interest due to recent economic indicators, both domestically and abroad, pointing to signs of slowing growth and the impact of trade tariffs. While still very early in the reporting season, the good news is that earnings have been better than feared. The EPS growth rate for the second quarter is trending toward +2.3%, which is a slight improvement relative to the -2% growth rate expected only a few weeks earlier.

US Financials have posted stronger than expected results due to a robust lending environment, tight expense controls and aggressive share buybacks. Credit conditions remain sound, putting to rest any concerns that the US consumer is showing signs of fatigue. While the consumer appears healthy, earnings weakness from US railroads highlight some of the challenges that the US industrial sector is facing. CSX lowered full year guidance this week due to macroeconomic and trade uncertainty, sending the stock down 10% on the day. The disparity in earnings reflects the bifurcation that the US economy is experiencing since the trade dispute began last year. Adding to the noise, the continued shutdown of Boeing’s 737 fleet has also damaged trade – airlines are a significant manufacturing segment with ripples through a variety of industrial areas.

Recent trade policies have slowed several cylinders of the US economic engine, leading to declining economic forecasts for the full year despite a healthy consumer. The market appears to be optimistic that US and China trade relations will improve in the coming months healing the US industrial sector and business confidence. Until then, we expect a choppy environment for the foreseeable future with heightened earnings volatility. Our view is that the US consumer will finish strong after a noisy start to the year, but ultimately the industrial sector needs to fire up again for this economy to get back to a growth rate that soothes investors and extends the cycle.

ETFG Quant Movers
The top 3 Quant Gainers of this week are IQ Chaikin US Large Cap ETF (CLRG), Sprott Gold Miners ETF (SGDM), and Vanguard FTSE All-World ex-US ETF (VEU). The top rated 3 Quant Losers of the week are IQ 50 Percent Hedged FTSE Europe ETF (HFXE), Global X MSCI Greece ETF (GREK), and JPMorgan Long/Short ETF (JPLS).

ETFG Weekly Select List
The ETFG Select list shows our top-rated ETF by each sector. Global X Gold Explorers ETF (GOEX) is our top rated Basic Material. Invesco Dynamic Retail ETF (PMR) is our top rated Consumer Discretionary. Our top rated Consumer Staples ETF is iShares Global Consumer Staples ETF (KXI). Our top rated Energy ETF is VanEck Vectors Oil Service ETF (OIH).

To learn more about our ETFG Select List, please visit us at https://www.etfg.com/etfg-select-list or call us at (212) 223-ETFG (3834).

Thanks for reading ETF Global Perspectives!

ETFG 21 Day Free Trial:  https://www.etfg.com/signup/quick
______________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.