Pouting Pundits of Pessimism

Consensus expectations are for S&P 500 Q2 operating earnings per share of +7.0%. We saw +14% in Q1. This would be the fourth consecutive quarterly gain. In the past five years, companies have been beating expectations by roughly +3.5%, if that trends holds, EPS gains could come in near 10%. Thus far, just 5% of companies have reported, with 78% beating expectations. (LPL Research)

The NFIB Index of Small Business Optimism shows US small business owners’ optimism waned in June due to Congressional inaction on healthcare reform. The index declined 0.9 points to 103.6. The Index remains at a historically high level, but within the Index there are signs of trouble that should be a concern. Fewer business owners expect business conditions to improve, and fewer expect sales to improve. (NFIB)

The Pouting Pundits of Pessimism are now preaching “high debt levels among nonfinancial corporations” as the coming end of the world. Nonfinancial US corporation debt is at a record high of $18.9 trillion. Since 1980, nonfinancial corporate debt has averaged 44.9% of total assets. Right now, these debts total 44.5% of assets, slightly less than average. The record was 50.6 in 1993, right at the beginning of the longest economic expansion in US history. (FTA Advisors)

The S&P 500 is up 5 and the NASDAQ is up 25. The MSCI international index is lower.

Oil is up 59 cents at $45.63 a barrel.

Gold is up $1 at $1216 a Troy ounce.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

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Financial Focus • July 12, 2017


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