My view on what's going on in the financial markets and the global economy, and a few other things that might interest me from time to time.

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This Week Matters: Davos and 4Q2019 Earnings

Updated: Jul 19, 2020

The main focus for the remainder of this week as far as the global financial markets are the annual meeting of The World Economic Forum in Davos (Jan 21-24) and a slew of 4Q earnings coming our way from US companies.

The World Economic Forum in Davos

If you want to know what the commotion is all about regarding the sessions in Davos this week, this is straight off The World Economic Forum website: “It [the meetings] will bring together 3,000 participants from around the world, and aim to give concrete meaning to “stakeholder capitalism”, assist governments and international institutions in tracking progress towards the Paris Agreement and the Sustainable Development Goals, and facilitate discussions on technology and trade governance.”


The programme for the World Economic Forum in Davos agenda is here. You can choose the day on the top of the menu. Today’s sessions begin at 8h30 CET and the last session is 18h00 CET.


Today is going to be interesting because we have Greta Thunberg speaking on panels at 8h30 CET and at 13h00 CET, both dealing with environmental issues / outlook, and sandwiched right in-between is “A Special Address by President Donald J. Trump” at 11h30 CET. Look for #POTUS to mainly focus on taking (yet another) economic “victory lap.”  And there are plenty of other panels covering interesting topics during the Davos meetings. Alongside this, CNBC and Bloomberg – both of which provide intense coverage of the meetings – will have various one-on-one interviews with a variety of business and political leaders.  Davos will set the stage as far as a discussion of the major economic and social issues that face global business and countries as we start the new decade, and I have always found most of the discussions very interesting.  


As an aside as a precursor to these meetings, the IMF reduced their global growth outlook yesterday for 2020 to 3.3% (last projection was 3.4% in October, and actual 2019 world economic growth is estimated at 2.9%).  You can read more about the IMF outlook here. 

4Q Earnings for U.S. companies

More 4Q earnings are on the way this week for US companies, following the release of earnings from some of the major US banks last week (JPM, BofA, Wells Fargo, Morgan Stanley and Goldman Sachs).   A decent “Company Earnings Calendar” is available on Yahoo Finance, which is showing 217 releases this week (Jan 20-24).   This site also provides time of release on the day (if known) and consensus estimates of 4Q earnings.   Companies releasing earnings this week include a myriad of other banks but also many corporates, including the likes of (day this week/number of companies releasing earnings):

Tues (41): United Airlines, Interactive Brokers, Las Vegas Sands, Halliburton, Capital One and Teledyne Weds (63): Abbott Labs, Ally Financial, Baker Hugues, Fifth Third Bancorp, Prologis, Netflix, TI and J&J Thurs (70): American Airlines, Southwest Airlines, JetBlue, P&G, Travelers, E*TRADE, Intel, Colgate-Palmolive, Kimberly-Clark, GATX, NextEra Energy, Moog, Keycorp Fri (16): AMX, Air Products, Capstar Financial

Here is a reminder on the trajectory of recent earnings of the S&P 500 (year-over year) (source: Refinitiv)

As you can see, S&P 500 earnings growth has been slowing since 4Q2018. Consensus 4Q2019 earnings for the S&P 500 seem to be coming in at a further slowing of growth in the -1.7% to -2.1% range (estimate vis-à-vis 4Q2018, consensus range).

For context, PE ratio and dividend yields for the S&P 500 data are below (source: multpl.com):


Historical S&P 500 PE

Historical Dividend Yield, S&P 500

As far as outlook for 2020, a CNBC poll shows a variety of analysts forecasting the year-end level of the S&P 500 ranging from 3,000 (-6.9% vs YE 2019, Morgan Stanley) to 3,500 (+8.7%, Oppenheimer). For reference, the 2019 close of the S&P 500 was 3,221.29. 

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