My Investing Muse

Is the S&P500 a good reflection of the US economy? As more Americans struggle with the cost of living, the S&P500 is currently in decline. Is this a reflection of the US economy or is this a good gauge of the global economy? The latest Q3/2023 GDP figure released has revealed a strong robust economy. US GDP soared to a 4.9% in Q3/2023. This is the highest since the end of 2021 and a big jump from 2.1% in Q2/2023. From various sources, strong consumer spending and government spending drove the growth.  Does this mean that the recession is over? Is this sustainable in lieu of the Federal, commercial, and private debts? Revenue sources of S&P500 companies Extract from the  article  from Globalxetfs: Companies that generate a substantial part of their revenue from outside of the U.S. could experience additional earnings compression, albeit with a lag.  Roughly 40% of S&P 500 revenues are generated outside of the U.S., and about 58% of Information Technolo...

This came after watching a clip by Patrick Bet and Joe Ragan.  From the video, I realized that State Street Corporation, Vanguard and Blackrock own about 20% of the S&P with their shares and their various ETFs. If Blackrock becomes a country, it will be the 3rd biggest in the world after the USA and China with about $10 trillion of assets under management (AUM).  I have listed the charts of BlackRock and State Street stocks below.  For Vanguard, only their ETFs are listed, not the company stock itself. State Street Corporation (STT) Blackrock (BLK) Can these 3 companies exercise some influence over the entire stock market? With their ETFs, we can expect their AUM to continue to grow as more people get into passive investing and buying ETFs using dollar cost averaging (DCA). My investing muse With this, I am wondering if it makes sense to invest directly in BlackRock and State Street.  In terms of commissions, the revenue is certain but the performance of the ETFs...

Factset has published a good overview as of 31 Aug 2023 for the S&P500 Q2/2023 earnings season: Here are some of the highlights: Inflation was mentioned 288 times and remained a topic of concern for the market. Should interest rates continue to rise, we can expect funds to move towards the bond market and out of the high-growth stocks. Out of the 11 business sectors, Consumer Discretionary has gained the most at 54%. 45 S&P500 companies have provided positive EPS guidance for Q2. It is the most positive since Q3/2021 and represents more companies having a more bullish outlook. Personally, this is good news. With less than 10% of the businesses, this can be limited to certain sectors with the rest of the sectors being neutral, less bullish or even bearish towards the market outlook. 79% of the companies have actual EPS above estimated EPS. This can be read as good news, with more companies beating the market expectations. However, beating EPS can be done if the estimate is lowe...

S&P 500 Earnings - Historical Chart This interactive chart compares the S&P 500 index with its trailing twelve-month earnings per share (EPS) value. Whenever there is a crossover of value, we can expect a recession (area shaded in grey). This is an observation and there can always be exceptions. Based on the chart below, it has rightly “signalled” the recessions of 2000, 2008 and 2020. However, this is a typical lagging indicator as this crossover typically happens after the recession. This is due to the lagging updates from the quarterly earnings. For 2022, the charts look to point to another potential crossover. Thus, let us continue to be prepared for worsening market conditions. Chart  of S&P 500 and its earnings The following is a chart of the S&P 500 earnings forecast extracted from Gurufocus. S&P 500 earnings forecast from  GuruFocus From the  estimates , the earnings are expected to be in the red from Q4/2022 to Q3/2023. It will be followed by ...