Market Wrap
Narratives
While not everyone needs to get the vaccine for it to be effective in curbing the spread, projections for the global economy in 2021 depend heavily on assumptions about widespread vaccination in major western nations. Core to our equity market forecast has been the assumption that an effective vaccine is delivered and widely distributed in the US by the first half of 2021. However, the first week of vaccine distribution has proven that the logistics of proper delivery are complex and uncertainty remains around the number of doses that will be distributed in the first half. - David Kostin, Goldman Sachs
Week Ahead
Third quarter GDP updates for the US, UK, Spain and Netherlands will be in the spotlight next week, alongside US personal income and outlays and durable goods orders, Eurozone consumer morale, and Japan and Australia retail trade numbers. Elsewhere, central banks in China, Thailand and Turkey will deliver their monetary policy decisions. Traders will also react to any further development in US stimulus talks and post-Brexit trade negotiations.
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Earnings
The estimated (year-over-year) earnings growth rate for the S&P 500 for CY 2021 is 22.1%, which is above the 10-year average (annual) earnings growth rate of 10.0%. If 22.1% is the actual growth rate for the year, it will mark the largest annual earnings growth rate for the index since CY 2010 (39.6%). The unusually large growth rate can be attributed to both an easy comparison to weak earnings in CY 2020 (due to the impact of COVID-19) and an expected improvement in earnings in 2021 - FactSet
Metric | This Week | Prior Week | Change | Comments |
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Forward 12-mo Estimate | 161.17 | 160.66 | 0.5099999999999909 | Rose again this week |
Forward 12-mo PE | 23 | 22.8 | 0.1999999999999993 | Versus the 21.5x at the start of the quarter. |
Earnings Yield | 4.34 | 4.39 | -0.04999999999999982 | |
2y Combined Average Growth Rate % | 4 | 3 | 1 | Average over last 6 months |
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S&P 500 Futures
Bull vs Bear
Bulls will seek to maintain value above 3700 (-0.17%). Odds favor a retest of last week's ETH 3723.00 print (+0.45%) at some juncture.
Bears will seek to break and hold below 3700 and ideally extend range below the WLO (3636.25, -1.89%) on a closing basis.
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Indicators
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