How bad have things gotten for the energy sector? FactSet is now predicting that the sector's earnings will drop by more than 100 percent in the first quarter year-over-year. They are projecting a 103.8 percent year-over-year decline, because the sector is now expected to report an aggregate loss of $485 million for the quarter, compared to year-ago earnings of $12.9 billion.
The biggest forecasted winner is the Telecom sector, which is expected to have earnings growth of 13.2 percent. But that's skewed a bit, because the merging companies of AT&T and DirecTV are being compared to just AT&T from a year ago. Excluding that merger, the estimated earnings growth rate for the Telecom sector would fall to 1.5 percent.
That would give the Consumer Discretionary sector the highest projected earnings growth, at 10.0 percent. The strongest areas within this sector are internet retail, projected to have 81 percent earnings growth, and automobile manufacturers, projected at 49 percent.
Monday, April 11, 2016
Friday, April 8, 2016
Charge It!
One sign of a growing economy: Revolving credit outstanding, mostly credit cards, increased at a 3.74 percent annual pace in February. That same figure had actually contracted by 0.31 percent in January. Revolving credit has gone up in 11 of the past 12 months.
Increased levels of credit are considered a sign a sign that steady job creation is helping secure household finances. Overall borrowing by U.S. consumers also picked up a little in February; outstanding consumer credit rose by a seasonally adjusted $17.22 billion in February from the prior month.
This has turned into a longstanding trend almost from the end of the recession. Overall consumer credit has grown every month for the past four and a half years.
Increased levels of credit are considered a sign a sign that steady job creation is helping secure household finances. Overall borrowing by U.S. consumers also picked up a little in February; outstanding consumer credit rose by a seasonally adjusted $17.22 billion in February from the prior month.
This has turned into a longstanding trend almost from the end of the recession. Overall consumer credit has grown every month for the past four and a half years.
Thursday, April 7, 2016
The Demise of the Starter Home
For a long time, the traditional path of home ownership in America involved buying a starter home, a small house that befits the smaller salaries and smaller family that most young adults have. As that household prospered and grew, it then set its sights on a much larger home, maybe moving from the city to the suburbs.
But that tradition no longer holds for many people. According to a new Bank of America poll of more than 1,000 adults 18 and older who would like to buy a home in the future, 75 percent of first-time buyers would rather bypass a starter home, even if they’d have to save more to do it. And 35 percent said they’d want to retire in that first home.
And they want to start out in the suburbs. The report found that 52 percent of first-time home buyers want a home in the suburbs. Only 26 percent said they wanted to live in the city and 22 percent said they wanted to live in a rural area.
But that tradition no longer holds for many people. According to a new Bank of America poll of more than 1,000 adults 18 and older who would like to buy a home in the future, 75 percent of first-time buyers would rather bypass a starter home, even if they’d have to save more to do it. And 35 percent said they’d want to retire in that first home.
And they want to start out in the suburbs. The report found that 52 percent of first-time home buyers want a home in the suburbs. Only 26 percent said they wanted to live in the city and 22 percent said they wanted to live in a rural area.
Wednesday, April 6, 2016
Hiring Takes Off
Some more good employment news, following on the heels of last week's jobs report: More Americans were hired to start a new job in February than in any month since before the recession that began in 2007—about 5.4 million people, according to the Labor Department's Job Openings and Labor Turnovers Survey.
Yesterday’s report also showed an increase in the number of people who voluntarily quit a job in February, which rose to about three million from 2.9 million. Labor economists generally regard the overall rate of quitting as a sign of the labor market’s health. When the economy is thriving, more people have the opportunity or the confidence to search for a better job.
Today’s report also shows a continued low rate of layoffs. The layoff rate in February was 1.2 percent of workers, close to the record low of 1.1 percent. Unlike during the recession, the majority of workers who leave a job today do so of their own accord.
Yesterday’s report also showed an increase in the number of people who voluntarily quit a job in February, which rose to about three million from 2.9 million. Labor economists generally regard the overall rate of quitting as a sign of the labor market’s health. When the economy is thriving, more people have the opportunity or the confidence to search for a better job.
Today’s report also shows a continued low rate of layoffs. The layoff rate in February was 1.2 percent of workers, close to the record low of 1.1 percent. Unlike during the recession, the majority of workers who leave a job today do so of their own accord.
Tuesday, April 5, 2016
More Roller Coaster Rides Ahead?
As we said yesterday, the first quarter of 2016 was a roller coaster ride for the markets. The S&P 500 index recorded 26 moves in either direction of 1 percent or more, in either direction, from one day’s close to the next during the quarter. That's double the average number and the sixth most ever.
Does that mean anything for the rest of the year? If history is a guide, we could be in for a huge move over the remainder of the year. The S&P 500 has had five years with similar volatility to what we've seen so far this year, all since 2000. And all five ended with a big change in the market.
The funny thing is, during three of those years — 2000, 2001 and 2008 — the S&P 500 notched double-digit declines. But in 2003 and 2009, the S&P 500 ended up recording a nearly 25 percent gain.
Does that mean anything for the rest of the year? If history is a guide, we could be in for a huge move over the remainder of the year. The S&P 500 has had five years with similar volatility to what we've seen so far this year, all since 2000. And all five ended with a big change in the market.
The funny thing is, during three of those years — 2000, 2001 and 2008 — the S&P 500 notched double-digit declines. But in 2003 and 2009, the S&P 500 ended up recording a nearly 25 percent gain.
Monday, April 4, 2016
Biggest Winners from the First Quarter
The first quarter of 2016 ended last Friday, and it was an up-and-down quarter for most investors: The major indexes were all down by around 10 percent as of mid-February, but rallied to post modest gains on the quarter.
The biggest winners of 2016 so far have also been on a roller coaster ride. Every single one of the S&P's biggest gainers in the first quarter had been down in 2015. Those stocks:
The biggest winners of 2016 so far have also been on a roller coaster ride. Every single one of the S&P's biggest gainers in the first quarter had been down in 2015. Those stocks:
- Freeport McMoRan up 52.7% so far in 2016; down 71.0% in 2015
- Newmont Mining up 47.7% so far in 2016; down 4.8% in 2015
- Urban Outfitters up 45.5% so far in 2016; down 35.2% in 2015
- Michael Kors up 42.2% so far in 2016; down 46.7% in 2015
- Wynn Resorts up 35.0% so far in 2016; down 53.5% in 2015
- PVH up 34.5% so far in 2016; down 42.5% in 2015
- Range Resources up 31.6% so far in 2016; down 54.0% in 2015
- Exelon up 29.1% so far in 2016; down 25.1% in 2015
- EQT up 29.0% so far in 2016; down 31.1% in 2015
- Cabot Oil & Gas up 28.4% so far in 2016; down 40.3% in 2015
Friday, April 1, 2016
March Jobs Report
The jobs situation seems to have settled into a comfortable groove at this point. According to the March employment report released by the Bureau of Labor Statistics this morning, the economy added 215,000 jobs for the month, and has now added an average of 209,000 jobs per month this year. The headline unemployment rate ticked up from 4.9 to 5.0 percent.
Among the industries, retail was the big winner in March, adding 48,000 jobs, the single-largest number of any sector. Over the past 12 months, retail has added 378,000 jobs. Meanwhile, employment in manufacturing declined by 29,000 in March, and mining lost 12,000 jobs. Since reaching a peak in September 2014, employment in mining has decreased by 185,000.
Maybe the best news from this morning is that the labor force participation rate continues to move upward, to 63 percent in March from 62.9 percent in February. It is up 0.6 percentage point since September, meaning more people keep coming into the labor force.
Among the industries, retail was the big winner in March, adding 48,000 jobs, the single-largest number of any sector. Over the past 12 months, retail has added 378,000 jobs. Meanwhile, employment in manufacturing declined by 29,000 in March, and mining lost 12,000 jobs. Since reaching a peak in September 2014, employment in mining has decreased by 185,000.
Maybe the best news from this morning is that the labor force participation rate continues to move upward, to 63 percent in March from 62.9 percent in February. It is up 0.6 percentage point since September, meaning more people keep coming into the labor force.
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