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Market Update: 7-17-17

Jerris Wealth Management Group LPL Research Weekly Market Update

GLOBAL SUMMER EARNINGS
SIZZLE OR FIZZLE?

Burt White Chief Investment Officer, LPL Financial | Matthew E. Peterson Chief Wealth Strategist, LPL Financial

Can overseas earnings continue to grow and extend the first-half rally in many international markets? That is the question investors are asking as second quarter 2017 earnings season begins. Since the financial crisis of 2008, U.S. companies and equity markets have generally outperformed their overseas peers. Greater U.S. profitability and corporate efficiency have resulted in stronger earnings growth, and domestic equity markets outperforming overseas ones. That may be starting to change, as earnings growth is improving overseas and international markets are outperforming domestic market indexes.

Now that Europe is past the potentially upsetting elections in the Netherlands and France with little volatility, the market will be focusing on earnings. European corporate earnings had been weak until the fourth quarter of 2016, which continued the trend of strong fourth quarters, even in weak years [Figure 1]Despite a strong finish in 2016, for the year European corporate earnings had declined -5.4% in U.S. dollar terms. Unlike in other years, earnings started strong in 2017, with annual earnings growth of 15% through the rst quarter of 2017. Expectations were high, and 62% of companies outperformed expectations, far better than recent performance. The single largest contributor to growth came from energy companies, which bene ted from the rebound in oil prices over the past year. Other sectors also showed strength, with earnings improvements in basic materials, consumer companies, as well as financials.

Market Update: 7-10-17

Jerris Wealth Management Group LPL Research Weekly Market Update

SECOND QUARTER 2017 EARNINGS PREVIEW Q1 A TOUGH ACT TO FOLLOW

Burt White Chief Investment Officer, LPL Financial | Jeffrey Buchbinder, CFA Market Strategist, LPL Financial

Earnings season is underway this week (July 10–14) and may be another good one, with double-digit S&P 500 Index earnings growth possible. But getting to double digits will be tougher than it was in the first quarter when S&P 500 earnings increased more than 15% year over year.

First quarter earnings season will be a tough act to follow as the year-over-year comparison gets more challenging. The first quarter of 2016 was the trough of the earnings recession, so the first quarter of 2017 had the easiest annual comparison. Growth improved (fell less) in the second quarter of 2016 as corporate America began to emerge from the earnings recession, lifting the base for comparison for the just-completed second quarter. This trend will continue over the rest of 2017 given the earnings growth acceleration achieved during the third and fourth quarters of 2016 [Figure 1].

Market Update: 6-26-17

Jerris Wealth Management Group LPL Research Weekly Market Update

A TECHNICAL CHECK-IN
THE GLOBAL BULL LOOKS STRONG

Burt White Chief Investment Officer, LPL Financial | Ryan Detrick, CMT Senior Market Strategist, LPL Financial | Dave Tonaszuck, CMT Technical Strategist, LPL Financial

The global equity bull market is alive and well, with very broad participation. Longer-term technicals continue to look very healthy and strong, even as the bull market and economic recovery in the U.S. turns eight years old. A closer look at key indexes suggests the path of least resistance remains higher for stocks, although it likely won’t be an easy ride, as volatility could creep higher during the second half of 2017.

Market Update: 6-19-17

Jerris Wealth Management Group LPL Research Weekly Market Update

MIDYEAR OUTLOOK 2017 BUSINESS FUNDAMENTALS BACK AT THE CONTROLS

Burt White Chief Investment Officer, LPL Financial | Jeffrey Buchbinder, CFA Market Strategist, LPL Financial

We forecast 6–9% returns for the S&P 500 Index in 2017. As investors increasingly trust that the economy can stand on its own without the need of monetary policy support, business fundamentals should take over as the primary market engine and corporate profits will take on increasing importance. We have slightly raised our 2017 S&P 500 Index total return forecast to 6–9%, commensurate with expected earnings gains.

Market Update: 6-12-17

Jerris Wealth Management Group LPL Research Weekly Market Update

HURDLING OVERSEAS EARNINGS WHAT DO THE FORECASTS TELL US?

Burt White Chief Investment Officer, LPL Financial | Matthew E. Peterson Chief Wealth Strategist, LPL Financial

Overseas earnings were even better than expected during the first quarter (Q1) of 2017. Global equity analysts were looking for strong earnings growth from overseas companies after years of flat to declining earnings; for the most part, those markets delivered. Stock markets themselves responded, with international markets generally outperforming the S&P 500 Index. Frequently after earnings are released, analysts may reduce future growth expectations, often based on conservative comments from companies as they manage expectations. However, earnings expectations only decreased modestly during this period, and actually increased further for some regions. It is great to see continued optimism on corporate fundamentals, but it could prove challenging for companies to outpace expectations again.

Market Update: 6-5-17

Jerris Wealth Management Group LPL Research Weekly Market Update

MASTER LIMITED PARTNERSHIP
MORE GOING ON THAN OIL PRICE

Burt White Chief Investment Officer, LPL Financial | Matthew E. Peterson Chief Wealth Strategist, LPL Financial

Master limited partnerships (MLP) appear to be a natural way to invest in the changing energy landscape. MLPs are exclusively focused on energy infrastructure in the United States and Canada. North American energy production has become a dominant factor in the price of oil and in the North American drive to be energy independent. Yet, the pricing and performance of MLPs can be complicated, influenced by systemic factors, such as the prices of oil and gas, interest rates, and movement in the equity markets. MLPs are also influenced by the degree of success of each individual partnership, in the same way that traditional stocks’ performances are determined by both market and individual factors. Despite recent performance, we believe that the sector may still represent a good long-term investment option to potentially profit from increased North American energy production.

Our Team

Susan Jerris

Susan
Jerris

LPL Registered Principal 
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Anthony Roble

Anthony
Roble

LPL Registered Administrative Assistant
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CA Insurance License #0K61923
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Diana Esperon

Diana
Esperon

Administrative Assistant
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