Top 5 vs. S&P 500 ex-Top 5 – YoY Contribution of EPS and P/E to Returns The performance gap could widen further, as the top 5 largest stocks in the S&P 500 are superior on almost every financial metric (revenue, profit growth, margin structure, volatility and corporate leverage). Image: Credit Suisse Research
Money Supply to GDP vs. Equities and Bonds Historically, when money supply exceeds nominal GDP growth, it tends to be bullish for stocks and bonds. Image: Gavekal, Macrobond
Average Performance by S&P 500 Quality Ranks when the Profits Cycle Decelerated Historically, high quality stocks (A+) have outperformed when the profits cycle decelerates, as investors tend to pay up for stable earnings growth. Image: BofA US Equity and Quant Strategy
Valuation – Emerging Market and Developed Market Countries – PE10 vs. 10-Year Forward Returns Valuation matters over time in the stock market. This chart shows the PE10 vs. subsequent 10-year CAGR (Compound Annual Growth Rate). Image: Topdown Charts
U.S. Buybacks Goldman Sachs expects buybacks to fall by 50% during 2020 compared with 2019 levels, suggesting slower EPS growth and less support for stock prices. Image: Goldman Sachs Global Investment Research
Implied Trailing 12-Month Buybacks Goldman Sachs expects a sharp decline in buybacks in 2020 and 2021, suggesting less support for stock prices and slower EPS growth. Image: Goldman Sachs Global Investment Research
Earnings, Dividends and Valuation Chart showing the deviation of the S&P 500 Index against its trend line. The U.S. stock market needs earnings growth to rise this year. Image: Fidelity Investments
U.S. Equities and Global Equities ex-U.S. This chart suggests that higher yields could cause great rotation from bonds to stocks, US equities to non-US equities, growth to value, large caps to small caps, tech stocks to bank stocks, credit to commodities,… Image: BofA Global Investment Strategy
Starting Valuation Predicts Future Returns Based on the Shiller CAPE ratio, the chart suggests a 10-year compound annual growth rate of only 2% to 4% for the U.S. stock market. Image: Fidelity Investments
Earnings Estimate Progression The consensus growth estimate for Q3 earnings stands at -3.2%, but the earnings recovery seems better than 2016. The Fed’s dovish pivot and low interest rates should continue to support the U.S. stock market. Image: Fidelity Investments