Oct 5, 2019
This week, I’m getting my beloved crystal ball out to tell you why I think a lot of the recession rumors out there right now are based more on sensationalism than actual data, and why I’m still positive about the direction of the economy and hence, the stock market.
Today, I want to turn to corporate profits, particularly the profits of the companies in the S&P 500, to look under the hood of the state of the economy.
The companies in the S&P 500 are the largest, publicly held businesses in the United States. They make up pretty much every household name across every industry.
The profits of these businesses provide an excellent window into where we are in this economic cycle, and importantly, S&P 500 company profits have a strong influence on stock prices and hence, your retirement portfolio.
Overall, S&P 500 profits are still strong, but there are a few weak points: Companies with exposure to China and tariffs have been struggling, and certain industries like pharmaceuticals, materials, and industrials are struggling.
Companies is the S&P 500 are just about done reporting their profits for the 2nd quarter of 2019, as I’m collecting this data. Profits for these companies is up about 5% year over year and 72% of companies have beaten the expectations on earnings estimates, according to JP Morgan Asset Management.
While not every big business is hitting it out of the park this year, most are still growing strong, which is a good sign that the economy is likely not yet near the cliff of the next recession.
That’s it for today. Thanks for listening. Tomorrow, we’re going to recap the week and I’m going to give you a little preview of next week’s theme.
My name is Ashley Micciche and this is the One Minute Retirement Tip.
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