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
World’s Central Banks Are Cutting Rates World’s central banks are lowering interest rates, in order to boost money supply in the economy and stimulate economic growth. Image: Charles Schwab
US-China Trade War and Past Major Trade Conflicts In the past, tariffs were in place for long periods of time. The US-China trade war is hitting global growth, by his importance, size and scope. Image: Goldman Sachs Global Investment Research
Global Nominal GDP and Corporate Profits This chart shows the correlation and the slowdown in global growth and corporate profits. Historically, margin pressures have preceded the start of recessions. Image: J.P. Morgan
Global Composite PMI Leads Global GDP Growth Chart suggesting that the global composite PMI leads global GDP growth by 2 months. Image: Oxford Economics
U.S. ISM Manufacturing Index and S&P 500 Cyclicals vs. Defensives Chart showing that U.S. cyclicals sectors relative to defensive sectors are still pricing in a strong rebound in growth (R = 0.82). Image: Deutsche Bank Global Research
U.S. ISM Manufacturing Index vs. U.S. ISM Non-Manufacturing Index Although the non-manufacturing sector’s growth slowed, it continues to reflect strength for now. Image: Nordea and Macrobond
3-Month Rate 1-Year Forward vs. 3-Month Leads U.S. GDP This chart suggests that the 1y3m-3m slope leads U.S. GDP. The 1y3m-3m slope has turned down sharply and is informative for year-head growth. Image: BofA Merrill Lynch
Copper to Gold Ratio and Conference Board Leading Economic Index (LEI) When the copper-to-gold ratio decreases, it is an early warning signal for the economy, meaning that growth optimism is fading. Image: Wells Fargo Investment Institute
Fed Dovish Pivot – Stimulus Hopes Support Risk Appetite Growth sentiment appears to be stabilizing, due to optimism about fiscal policy. Image: Goldman Sachs Global Investment Research