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Entries for 2020

Earnings Support Market's Recent Move Higher

 October 6 2020     David Templeton
The one thing investor know about company earnings reports is it is a rearview mirror look on what has occurred on a quarterly or annual basis. This backward view may add little insight into what expectations might unfold in the future. Over the long run though, stocks do tend to follow earnings and or cash flow. Having noted this, the S&P 500 index bottomed in March while earnings bottomed in the...

Chicago Business Barometer Surges

 September 30 2020     David Templeton
Today's release of the Chicago Business Barometer for September jumped 11.2 points to 62.4. This is further evidence of an economy that is rebounding strongly from the virus initiated recession. The release noted, "all five main indicators saw monthly gains in September, with Production and New Orders leading the way.""Production recovered sharply in September, rising by 16.0 points to an almost t...

Higher Unemployment Level As Some States Are Slower To Reopen

 September 28 2020     David Templeton
Improvement is being made in the job market as the continuing claims data and unemployment rate continue to decline. In addition to the continuing claims category and as a result of the pandemic, another category of unemployment insurance has been created, the Pandemic Unemployment Assistance (PUA) category. The PUA program had 11.5 million individuals receiving benefits as of the week ending Sept...

Individual Investor Sentiment Not Matching Actions

 September 24 2020     David Templeton
The American Association of Individual Investor's Sentiment Survey release for the week ending 9/23/2020 showed bullish investor sentiment fell 7.1 percentage points to 24.9%. The decline in bullish sentiment largely showed up in the 5.6 percentage point increase in bearish sentiment. When all is said and done, the bull/bear spread widened to minus 21.1 percentage points from the previous week's s...

Here We Go Again: Value To Finally Outperform Growth?

 September 20 2020     David Templeton
So far for most of the month of September, the large cap value stock space has outperformed large cap growth. Since the end of the financial crisis of 2008/2009 I have probably written about the market's turn to favoring value at least a dozen times. If performance is the yardstick, the growth style has ultimately been favored by investors for the last ten or eleven years as seen in the below char...

Mega Cap Stocks Run Into A Headwind

 September 17 2020     David Templeton
The first two days of September saw the S&P 500 Index get off to a nice positive start, up 2.29% on a price only basis. Since then though the market has declined 5.4% on a total return basis. This decline has been led by the large cap technology stocks in the index. The blue line in the below chart represents the average return of six large cap technology companies in the index, Facebook (FB), Ama...

Small Business Optimism, And Importantly Hiring Plans, Remains Favorable

 September 8 2020     David Templeton
The NFIB Small Business Optimism Index for August was reported at 100.2, which is a 1.4 increase over July's reading. The NFIB report notes seven of the 10 index components increased while two declined. The Index remains at a high level, a level which was reached following the recession after the technology bubble. The NFIB report also notes the August reading is slightly above the 47-year average...

The Stock Market And Economy Seem To Be In Sync

 September 6 2020     David Templeton
There are times when I write a blog article and I remind readers the stock market and the economy are not the same. By that, I mean the stock market sometimes moves counter to what one might expect based on economic data releases. Often times this divergence occurs as the stock market is forward looking and its movement anticipates better or worsening economic conditions while much of the economic...

Stock Prices Reflecting A Resumption In Earnings Growth

 August 29 2020     David Templeton
One factor about the equity market is its movements are often influenced by expectations. Economic news that is reported better than those expectations can impact broad equity market prices and earnings that beat expectations are an important variable impacting the price of stocks too. For the broader marker, in this case the S&P 500 Index, earnings expectations for 2021 appear to have bottomed as...

So Far Not A Year For The Dogs Of The Dow

 August 17 2020     David Templeton
This year has not been a good one for the Dogs of the Dow strategy. A number of reasons can be cited, like energy sector weakness and both Chevron (CVX) and Exxon Mobil (XOM) included in the strategy this year or Cisco System (CSCO) and IBM a part of the Dow Dog portfolio and not Apple (AAPL). In a year where the FAANG + Microsoft (MSFT) portfolio is so dominant from a return perspective, it is cl...
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