Stock Market

No Recession Yet In Forward Profit Margins

Jun 23, 2022 1 min read

Corporate profit margins always plunge during recessions. They aren't doing so at this time, thus raising doubts about the credibility of imminent-recession forecasts. We can monitor the profit margins of the S&P 500 along with its 11 sectors and 100+ industries on a weekly basis using forward profit margins derived as the ratio of forward earnings to forward revenues, which are time-weighted averages of the consensus

Ed Yardeni

Bull/Bear Ratio Lowest Since March 2009!

Jun 22, 2022 2 min read

Bears started coming out of hibernation early this year. Now they are roaming all over the stock market. Here are the latest bearish sentiment readings, which are bullish from a contrarian perspective: (1) The Bull/Bear Ratio (BBR) was below 1.00 for the eighth consecutive week this week. It slipped for the third week to 0.60 this week—the lowest reading since early March 2009, which was when

Ed Yardeni

Well Below the 200-Day Moving Average

Jun 19, 2022 1 min read

Some widely followed technical and sentiment indicators suggest that the stock market is oversold and due for a rally. Consider the following: (1) The S&P 500 was extremely overbought last year. Around mid-year 2021, more than 90% of the stocks in the index were trading above their 200-day moving averages (dma). There has been a significant reversal of fortune since then with only 11.3% of the S&

Ed Yardeni

In the Event of Motion Sickness

Jun 19, 2022 1 min read paid

Below is the front cover of the latest Bloomberg Businessweek. It should be a very bullish contrary indicator for the stock market. In recent months, there have been plenty of signs of mounting bearish sentiment, which should be bullish from a contrarian perspective. However, fighting the Fed when the Fed is fighting inflation is not a good idea whether one is a contrarian or not. We still expect to see

Ed Yardeni

No Letup in the Valuation Meltdown

Jun 18, 2022 1 min read paid

The S&P 500’s forward P/E fell to 15.4 on Friday from just over 20.0 at the start of this year. That’s around the historical average for this valuation multiple. Lower readings typically have been associated with bear markets and recessions. The index fell into a bear market on Monday, but the jury is out on the recession call.

Ed Yardeni

A Horrible Week Even for Energy

Jun 18, 2022 1 min read

This was one of the worst weeks in one of the worst years, so far, for the stock market. Of the 100+ industries that we track in the S&P 500, only one was up, namely, Air Freight & Logistics. All the rest were down with more than half exceeding the 5.8% decline of the S&P 500. Keep in mind that the S&P 500

Ed Yardeni

David Bowie and S&P 500 Earnings

Jun 16, 2022 2 min read

Ground control to Major Tom: "Have you heard that the US economy is falling into a recession?" Like David Bowie's astronaut, S&P 500 industry analysts seem to be in outer space. Their earnings estimates are certainly out there still: (1) Our Squiggles analysis (below) shows that through the week of June 9, the S&P 500 consensus revenues estimates for 2022 and 2023

Ed Yardeni

Bull/Bear Ratio Remains Under 1.0

Jun 15, 2022 2 min read paid

The Bull/Bear Ratio (BBR) remains bearish. It has been bouncing around 1.00 since late February. During the bull market from March 9, 2009 through January 3, 2022, a reading of 1.00 or less turned out to be a very good short-term and long-term buy signal from a contrarian perspective. That’s when investors could count on the Fed Put to save the day. That’s no longer

Ed Yardeni

It’s Officially a Bear Market

Jun 14, 2022 2 min read

On Monday, the latest S&P 500 correction morphed into a bear market when the index closed down more than 20.0%—specifically 21.8%—below its record-high close on January 3, 2022. Over this period, the S&P 500 forward P/E plunged 26.6% from 21.4 to 15.7 even as forward earnings (i.e., the time-weighted average of analysts’ earnings estimates for 2022 and

Ed Yardeni

CPI Unnerves Investors

Jun 10, 2022 1 min read

This past week was an ugly one for the S&P 500 adding significantly (5.1ppts) to the 18.2% ytd loss in the index. The MegaCap-8 stocks continued to weigh most heavily on the S&P 500 Information Technology, Communication Services, and Consumer Discretionary sectors. Here is the ytd and past week's performance derby for the index and its 11 sectors: Energy (58.7%, -0.

Ed Yardeni

More Central Bank Tightening

Jun 9, 2022 1 min read paid

Don't fight the central banks when they are fighting inflation. Stock prices dropped today on news that the European Central Bank will end quantitative easing on July 1, then raise interest rates by 25bps on July 21. It will then hike again on September 8. At -0.5%, the ECB's deposit rate has been in negative territory since 2014. Unlike the Fed, the ECB remains committed

Ed Yardeni

S&P 500 Industry Analysts Giving Earnings Mixed Reviews