Producer, Consumer, Import, and Export prices are in focus this week as we recap third-quarter earnings and look down the road towards future earnings seasons.


According to FactSet, for the third quarter, companies have reported earnings growth of 5.9% and sales growth of 5.8%. In addition to these impressive gains, more companies are beating earnings per share and revenue estimates than average. For example:

Of the companies that have reported, 74% have reported EPS above the mean EPS estimate. That 74% figure is above both the 1-year (71%) and 5-year average (69%). At the sector level, Technology (90%) has the highest percentage of EPS beats, while Utilities (50%) and Telecom (50%) have the lowest.

Of the companies that have reported, 66% have reported revenue above the mean revenue estimate. That 66% figure is above both the 1-year (61%) and 5-year average (55%). At the sector level, Technology (81%) has the highest percentage of revenue beats, while Utilities (21%) has the lowest.

With regard to valuation, the forward 12-month P/E ratio is 18.0. This figure is above both the 5-year (15.7) and 10-year average (14.1). Since the start of the fourth quarter, the price of the S&P 500 index has increased by 2.4%, while the forward 12-month estimate has increased 1.1%.

See graph below.

Source: FactSet


Looking into the future, the prospects for growth look promising. The street currently expects earnings to jump to double-digit levels well into next year:

4Q2017: earnings growth of 10.4%, revenue growth of 6.2%

CY2017: earnings growth of 9.5%, revenue growth of 6.1%

1Q2018: earnings growth of 10.6%, revenue growth of 6.4%

2Q2018: earnings growth of 10.2%, revenue growth of 6.3%

CY2018: earnings growth of 11.0%, revenue growth of 5.2%

If past is prologue we would expect next year’s forecasts to come down as actual results come in.



Date Report Period Survey Prior
Monday, Nov 13: No Economic Data
Tuesday, Nov 14: PPI Final Demand M/M Oct 0.1% 0.4%
PPI Ex Food and Energy M/M Oct 0.2% 0.4%
PPI Ex Food, Energy, Trade M/M Oct 0.2%
PPI Final Demand Y/Y Oct 2.5% 2.6%
PPI Ex Food and Energy Y/Y Oct 2.2% 2.2%
PPI Ex Food, Energy. Trade Y/Y Oct 2.1%
Wednesday, Nov 15: CPI M/M Oct 0.1% 0.5%
CPI Ex Food and Energy M/M Oct 0.2% 0.1%
CPI Y/Y Oct 2.0% 2.2%
CPI Ex Food and Energy Y/Y Oct 1.7% 1.7%
Retail Sales Advance M/M Oct 0.1% 1.6%
Retail Sales Ex Auto M/M Oct 0.2% 1.0%
Retail Sales Ex Auto and Gas Oct 0.3% 0.5%
Empire State Manufacturing Survey Nov 25.8 30.2
Business Inventories Sep 0.0% 0.7%
Thursday, Nov 16: Weekly Jobless Claims Nov 11 239K
Philadelphia Fed Business Outlook Nov 24.0 27.9
Industrial Production M/M Oct 0.5% 0.3%
Capacity Utilization Oct 76.3% 76.0%
Import Price Index M/M Oct 0.3% 0.7%
Import Price Index Y/Y Oct 2.7%
Export Price Index M/M Oct 0.4% 0.8%
Export Price Index Y/Y Oct 2.9%
NAHB Housing Market Index Nov 68 68
Friday, Nov 17: Housing Starts M/M Oct 4.7% -4.7%
Building Permits M/M Oct 1.1% -4.5%
Source: Bloomberg


Based on shorter-term expectations, the “tactical” allocation within portfolios is overweight stocks versus bonds.



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Kevin Caron, CFA, Senior Portfolio Manager

Chad Morganlander, Senior Portfolio Manager

Matthew Battipaglia, Portfolio Manager

Suzanne Ashley, Analyst

(973) 549-4052



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