Battle of the market stars – Lou Ferrigno is earnings, ABC is stocks

Holland_F_150x150Tim Holland, CFA, Senior Vice President, Global Investment Strategist

Before there was reality TV there was, well, a lot of things including Battle of the Network Stars, which in a way was reality TV. Hosted by Howard Cosell and broadcast annually during the late ‘70s and early ‘80s, the show featured celebrities from the Big 3 networks – ABC, NBC, CBS – competing in a series of athletic events, sort of an Olympics for TV stars. It was spectacular.

We mention BOTNS as we are entering earnings season and earnings more than anything pull the market along – well earnings and interest rates, and rates are low and supportive of equity prices – and investors are worried as Wall Street is expecting Q1 2019 EPS for the S&P 500 Index to be down about 2%, the first year-on-year drop since 2016, per the chart below.

growth rate

Some fear we are facing a sustained drop in earnings and stock prices. We don’t think so, which brings us back to BOTNS and one of its most famous participants, the great Lou Ferrigno. An iconic moment in BOTNS is the 1979 Tug of War when Ferrigno, aka The Incredible Hulk from the CBS show of the same name, singlehandedly nearly pulls the ABC team into the pool separating the squads, helping win the event for his CBS team. Well, we see Lou Ferrigno as 2019 earnings and stocks as the ABC BOTNS team. Earnings might be flat to down slightly in Q1, but they should be up mid to high single digits for the year and will likely exceed estimates as the rebound in oil helps push energy company profits higher.

Growing earnings, muted interest rates, and contained inflation are all points of support for US stocks as we move through 2019 and should, in fits and starts, pull the market higher.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a registered investment advisor.

Chart Source: FactSet

 

Investment Insights Podcast: Despite the number of headlines last week, markets proved their resilience

Rosenberger_Podcast

Andrew Rosenberger, CFA, Senior Investment Manager

 

On this week’s podcast (recorded April 10, 2017), Andy discusses sentiment, job growth, and earnings season.

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Quick hits:

  • Despite the number of headlines last week (Syria, China, France, Jobs), markets proved their resilience by finishing the week flat.
  • Sentiment has come down from peak optimism seen in February.
  • Despite the weakness in the headline number, the underlying trends in job growth continue to be favorable.
  • Earnings season kicks off this week with Financials being the first group up.  Investors are looking for comments on loan growth & loan demand.
  • We continue to favor an overweight to risk assets within our discretionary portfolios.

For Andy’s full insights, click here to listen to the audio recording.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.