Saturday, December 24, 2016 3:31:37 PM
2017...S&P EARNINGS = $124 TO $130 A SHARE...
...from Daily Wealth...By Briton Ryle Wednesday, December 14, 2016
Predictions 2017
1. The S&P 500 will hit 2,425 (but don't expect it to finish the year there). Might as well get the toughest one over with first. I'm seeing S&P 500 earnings estimates between $124 a share and $130. Right now, 2016 earnings are expected to come in around $108 a share. So analysts are expecting a pretty big jump for earnings in 2017.
Why? Well, oil stocks will help. They've been a drag on earnings for two years. Now, with oil prices up, they can contribute on the positive side. And then there's Trump...
Analysts are already pricing in a corporate tax cut to 18–20%. And with Republican control of the government, this will likely happen.
At $130 a share, the 2,425 level commands a P/E just shy of 19. I think this is doable.
Expectations are already running high. That can certainly carry over to the early stages of policy actually being enacted. As in there will be enthusiasm if Trump goes after taxes first — stocks will rally more. But will overall policy be enough to sustain stock prices all year? This is where I have doubts.
Earnings estimates for the year ahead are always about 10% too high. Even if we get a boost to earnings from tax cuts, the S&P 500 will likely not hit $130 in per-share earnings in 2017. And if Trump really gets aggressive on the trade front, earnings could be impacted.
What if China retaliates against U.S. companies? GM is in the news today, as China has opened a probe. China can easily dent earnings for companies like Apple, Ford, and Starbucks.
So, I think we see a rally in the early going of 2017, with market highs coming in April/May. Then we get volatility in the second half and finish 2017 below the 52-week high.
2. Oil trades between $50 and $75. I think this one can be answered with a simple observation: Saudi Arabia wants to sell part of its oil company, Aramco, in an IPO. Will it make more with oil at $50? Or at $70? Exactly.
3. Gold rallies back to $1,300 in the second half. I know, I know, gold is very oversold right now. But with enthusiasm for stocks in the early going, I don't see a strong rally coming for the barbarous relic. Sure, a dead-cat bounce is likely soon — use it to lighten up. Don't expect a sustained move higher until late summer/autumn.
Daily
...from Daily Wealth...By Briton Ryle Wednesday, December 14, 2016
Predictions 2017
1. The S&P 500 will hit 2,425 (but don't expect it to finish the year there). Might as well get the toughest one over with first. I'm seeing S&P 500 earnings estimates between $124 a share and $130. Right now, 2016 earnings are expected to come in around $108 a share. So analysts are expecting a pretty big jump for earnings in 2017.
Why? Well, oil stocks will help. They've been a drag on earnings for two years. Now, with oil prices up, they can contribute on the positive side. And then there's Trump...
Analysts are already pricing in a corporate tax cut to 18–20%. And with Republican control of the government, this will likely happen.
At $130 a share, the 2,425 level commands a P/E just shy of 19. I think this is doable.
Expectations are already running high. That can certainly carry over to the early stages of policy actually being enacted. As in there will be enthusiasm if Trump goes after taxes first — stocks will rally more. But will overall policy be enough to sustain stock prices all year? This is where I have doubts.
Earnings estimates for the year ahead are always about 10% too high. Even if we get a boost to earnings from tax cuts, the S&P 500 will likely not hit $130 in per-share earnings in 2017. And if Trump really gets aggressive on the trade front, earnings could be impacted.
What if China retaliates against U.S. companies? GM is in the news today, as China has opened a probe. China can easily dent earnings for companies like Apple, Ford, and Starbucks.
So, I think we see a rally in the early going of 2017, with market highs coming in April/May. Then we get volatility in the second half and finish 2017 below the 52-week high.
2. Oil trades between $50 and $75. I think this one can be answered with a simple observation: Saudi Arabia wants to sell part of its oil company, Aramco, in an IPO. Will it make more with oil at $50? Or at $70? Exactly.
3. Gold rallies back to $1,300 in the second half. I know, I know, gold is very oversold right now. But with enthusiasm for stocks in the early going, I don't see a strong rally coming for the barbarous relic. Sure, a dead-cat bounce is likely soon — use it to lighten up. Don't expect a sustained move higher until late summer/autumn.
Daily
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