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Business/Finance See other Business/Finance Articles Title: Green Shoots and Dark Clouds Green Shoots and Dark Clouds Mike Burnick | Thursday, March 3, 2016 at 7:30 am Stocks have staged an impressive rebound rally over the past three weeks, with the S&P 500 Index rising 9.2% from February’s low, but still down 3.2% year-to-date. The upside move has been fueled in part by some better-than-expected economic data. Don’t get me wrong, the data remains downbeat, but isn’t as bad as many investors were expecting. Case in point, the ADP employment report yesterday showed U.S. firms adding 214,000 jobs in February, which was a big positive surprise, well above estimates of 185,000. As a result of this and other upbeat reports lately, the Citigroup Economic Surprise Index has turned sharply higher in recent weeks. Click image for larger view This is a gauge I follow closely, especially in turbulent markets. It measures the number of economic reports that come in better than expected (a positive surprise) compared with the number of data releases that disappoint (negative surprise). When the line is below zero, as it still is today, it means more negative than positive surprises. But notice the steady uptrend in recent weeks. This tells me that while the majority of economic data is still missing expectations, the number of negative surprises is declining. The Death of the American Dream It is coming … Nothing will ever be the same again for you or for your family. The America we know and love will be no more. The fallout of this historic event will be horrific for the unprepared. It will trigger all-out panic — first in the U.S. bond market … and later in the stock market. It will destroy millions of jobs … sentence most Americans to a “dark age” of depression and poverty … send gold and silver prices careening higher … and push the U.S. government to the brink of collapse. Click here to learn how to protect you and your family in the upcoming crisis! –Mike Internal Sponsorship In other words, the economy is getting “less bad” and that’s what financial markets react to: Subtle shifts in sentiment! So with the appearance of these “green shoots” for the U.S. economy, stocks, high-yield bonds, and other”risk” assets have rallied. But can it last? That’s where I see more dark clouds gathering on the horizon, because S&P 500 earnings estimates are being slashed at an accelerating rate. In fact, analysts are cutting first quarter 2016 profit estimates at the fastest pace in five years. Earnings estimates have plunged 9.6 percentage points in the last three months alone. Click image for larger view According to analyst estimates, S&P 500 earnings are on track to decline 8% during the upcoming first-quarter reporting season, and fall another 2% in the second quarter. This would mark five straight quarters of contracting corporate profits. The magnitude of the decline in S&P 500 earnings is the worst since the global financial crisis, according to Bloomberg. And history says this profit recession points to trouble ahead for stocks! Profits have fallen for five or more quarters only seven times since 1970, according to Bloomberg data, and six out of seven times the S&P ended up suffering a bear market decline of 20% or more. Bottom line: Whether you want to blame a strong dollar, the collapse in oil prices, or declining global growth — the evidence of shrinking profits is clear to see and it calls into question the sustainability of the recent stock market rally. Good investing, Mike Burnick P.S. Boris and Kathy have confirmation that they’ll get the green light for two explosive new “Buy” signals THIS WEEK … All they know for sure is that these exciting trades will be activated NO LATER than Friday … And when these two signals go out to their members, two things will happen: 1. If you have not yet activated your membership in Global Currency Investor, you will miss out on the opportunity to join them as they go for gains of up to 963% on these two trades, and … 2. You will have missed your opportunity to SAVE $2,400 on your Introductory Membership! CLICK THIS LINK for details on Global Currency Investor — and activate your membership while there’s still time to make sure you receive these “Buy” signals the minute they release them! Post Comment Private Reply Ignore Thread
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