B.I.G. Tips – Analyst Sentiment Heading into Earnings Season
Earnings season kicks off this week as the first of the major companies start to report Q3 numbers. Most of the big names reporting are all Financials like Blackrock (BLK) on Wednesday morning, Citigroup (C) and JPMorgan (JPM) on Thursday morning, and then Bank of America (BAC), PNC, and Wells Fargo (WFC) on Friday before the open, so we will have to wait a little while longer to get a better read on things in general.
We just published our quarterly look at analyst revisions heading into this earnings season. In this report, we take the current trends and break down how the equity market has performed during prior periods when analyst revisions were at similar levels.
For anyone with more than a passing interest in how equities are impacted by earnings season, this report is a must read. To see the report, sign up for a monthly Bespoke Premium membership now!
Asset Class Total Returns Over the Last 10 Years
Below is a look at our asset class performance matrix showing total returns for key ETFs that we track on a regular basis. Since today marks the 10-year anniversary of the start of the Financial Crisis bear market for the S&P 500, we thought it would be helpful to see how various asset classes have performed over the last ten years. We also include change from the ultimate low of the bear market on 3/9/09 as well as 5-year returns.
We’ll let the table do the talking on this one!
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The Best and Worst Stocks and Sectors Since the Start of the Financial Crisis
Ten years ago today marked the peak of the mid-2000s bull market for the S&P 500 and the start of the Financial Crisis bear market that ran from 10/10/07 to 3/9/09. Below is a look at S&P 500 sector performance over the last ten years along with how much each sector declined at its bear market low. We also include each sector’s current gain from its bear market low.
As shown, the Technology sector has gained the most over the last ten years from the prior bull market peak at +144%. Consumer Discretionary and Health Care are up the 2nd and 3rd most. Three sectors are still down from the 10/9/07 peak, however — Financials, Telecom, and Energy.
From their bear market lows, Technology, Consumer Discretionary, and Financials are up the most with gains of more than 400%. Both Telecom and Energy, on the other hand, are up less than 85% from their bear market lows.
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Below is a chart showing the rolling 10-year percentage change for the S&P 500 throughout its history. Note that the index is currently up 62.6% over the last ten years, which is well below the average rolling 10-year change of +103%. Moving forward from here, this reading should start to increase at a quick pace given that ten years ago today was the prior bull market peak. If the index were to stay at its current level, on March 9th, 2019, the rolling 10-year change would be +276% (the current % change from the bear market low on 3/9/09).
Below is a look at the current Russell 1,000 stocks that are up the most over the last ten years. There are 13 stocks that are up more than 1,000% over this time period, with Netflix (NFLX) on top at nearly +6,000%. Back on October 9th, 2007, NFLX was trading at $3.26/share. It’s currently at $196.87/share.
Other notables on the list of winners include Priceline (PCLN), Amazon.com (AMZN), Mastercard (MA), and salesforce.com (CRM). You may have expected to see Apple (AAPL) at the top of the list, but it ranks 32nd with a 10-year gain of 550%.
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Chart of the Day: 10 Years On
Bespoke Stock Scores: 10/10/17
The Closer — Two Pages On EM — 10/9/17
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Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke Institutional clients, we take a look at recent price action, flows, and economic data from a few emerging markets.
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Dollar Rally Yet to Impact Stocks
As we noted in a post last Friday (and in today’s Chart of the Day), the dollar has staged an impressive bounce off of its early September lows. You can see the rally and break of its downtrend line in the chart of UUP below.
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The dollar fell 10.75% from the start of the year through its closing low on September 8th. That’s a massive decline, and it impacted stocks significantly. S&P 500 companies that generate more than 50% of their revenues outside of the US averaged a gain of 18.69% YTD through September 8th. Companies that generate less than 10% of their revenues outside of the US only gained an average of 3.64% over the same time period.
Interestingly, though, the dollar’s 2.53% rally since 9/8 has yet to impact S&P 500 companies based on revenue exposure. “Domestic” companies that benefit from a strong dollar are actually underperforming companies with heavy international exposure since the dollar’s current rally began. Stocks with greater than 50% international revenues are up 4.4% since 9/8, while stocks with less than 10% international revenues are up just 2.66%. It looks like the “international” momentum that’s been in place all year is proving difficult to break. Or investors simply don’t think the dollar’s current rally will have much staying power. Regardless, positioning based on revenue exposure appears to be a bit out of whack over the last month. We’d bet that “domestics” start to gain steam soon if the dollar continues to move higher.
Bespoke’s International Revenues Database allows you to find the international revenue exposure for every stock in the S&P 500 and Russell 1,000. It’s available to Bespoke Premium and Bespoke Institutional members, which you can try out here.
