Robert Shiller’s S&P 500 Forecast for 2020: Is He Overly Optimistic?

Robert Shiller was on CNBC New Year’s Eve to make his forecast for the S&P 500 index in 2020.  His best guess is a 1430 level which works out to 14% price appreciation over the next ten years or 1.3% annually. Taking no issue with the P/E multiple he uses but only analyzing the earning [...]

Chicago PMI Highest Level Since April: Indicates Margin Pressure

The Chicago PMI released today came in at 62.5 (vs 60.6 prior and 61.0 consensus) which is the highest level since April. PMI Components (via zerohedge): Employment: 56.3 vs. Prev. 54.6 New Orders: 67.2 vs. Prev. 65.0, highest since May 2007 Prices Paid: 70.7 vs. Prev. 68.9, highest since April 2010 Production: 71.3 vs. Prev. [...]

Corporate Profits: What the Current Level Tells Us About S&P 500 Returns Over the Next Five Years

Last week, in his weekly market comment, John Hussman posted an interesting chart (see below) comparing the corporate profit to GDP ratio and the subsequent growth rate in corporate profits. I have previously posted on profit margins (see here and here) and will now further explore what profits margins at current levels imply about the [...]

Assets Returns Since QE2 Hints

A very nice interactive tool today from Reuters that shows asset returns based on different QE2 related time periods. Link. Notice how most assets rallied from the Jackson Hole speech until the official QE2 announcement and the USD declined. Since the actual announcement risk assets have sold off and the USD has rallied. Interesting that [...]

More on Profit Margins

An update to last week’s look at how QE2 may impact corporate profit margins. First, a chart of S&P 500 revenues and profits. This view complements the profit margin chart from last week.   Profit has recovered to within 10% of the all-time peak but revenue has only recovered to 15% of peak. Demand remains relatively [...]