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A Bird's Eye View Blog

Fireside Charts: 2020 Earnings Estimates Suffer Sharpest Drop Since January, Positive News for the Housing Market, and Has U.S. Unemployment Bottomed?

By:BCM Investment Team | Date:Oct23, 2019 | Category: Equity, Economics, Market Highlights, Fireside Charts

Today's another jam-packed day for earnings in a season that's been largely mixed so far; headline names include Microsoft, Ford, Boeing, and Catepillar, among many others. We're keeping our fingers crossed for good news, as the analyst outlook for 2020 seems to be increasingly weak; last week saw the steepest downward revision in nearly a year. The housing market is enjoying a boost from the recent rate cuts and record low unemployment, but while analysts are confident another cut is on the way, we're seeing early signs that unemployment may soon be on the rise. And while we saw some good (and surprising) news on manufacturing coming out of Richmond, the industry remains in a recession with China-sensitive regions bearing the brunt of the slowdown in the U.S. The conflict is weighing on China too, where plummeting exports to the U.S. have dragged their total export growth to nearly zilch. 

1. Are the analysts following the "typical" reporting trend or being overly cautious?


2020 earnings estimates

Source: Bloomberg, as of 10/21/19



2. The issue with a hedge fund is that it is an investment "wrapper" like a mutual fund... almost anything can be inside it...


hedge funds vs s&p

Source: WSJ Daily Shot, as of 10/22/19



3. Low mortgage rates continue to help revive the housing markets.


u.s. existing home sales

Source: WSJ Daily Shot, as of 10/23/19



4. This is for five predominantly rural/small states. If it spreads, a recession may be imminent...


u.s. state unemployment

Source: The Wall Street Journal, as of 10/21/19



5. A positive surprise out of the Richmond Fed...


richmond fed manufacturing

Source: WSJ Daily Shot, as of 10/22/19



6. Last month's gains have been reversed and then some, re-establishing the downward trend in Canadian manufacturing.


Canada industrial contraction

Source: Gavekal, as of 10/22/19



7. A nice synopsis...


u.s. china exports by region

Source: Pantheon Macroeconomics, as of 10/22/19



8. This will be a closely watched indicator that the "trade truce" is holding... The Chinese have used currency as a "weapon" in the trade war...



Source: WSJ Daily Shot, as of 10/22/19



9. China's total export growth is approaching zero...


china export growth

Source: Gavekal, as of 10/23/19



10. And why it matters...


china global share manufacturing exports

Source: Natixis, as of 10/22/19



11. Does the positive trend since 2014 imply that a fiscal stimulus package could be on the way?


Europe debt-to-gdp

Source: WSJ Daily Shot, as of 10/21/19



12. "...Give me your tired, your poor, your huddled masses yearning to breathe free. The wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me..." Emma Lazarus, the Statue of Liberty.


u.s. refugee limit

Source: Statista, as of 9/27/19



This summer the Fed cut interest rates for the first time since the financial crisis, cut again in September, and expectations are high for another reduction next week. With interest rates sliding ever lower, where can fixed income investors look for returns? Check out our piece "Finding Total Return in an Ultra-low Interest Rate Environment" for BCM Portfolio Manager and Managing Partner Dave Haviland's perspective!


Finding Total Return


Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.