Author Archives: Ted Kavadas

The September 2019 Wall Street Journal Economic Forecast Survey – Notable Aspects

The September 2019 Wall Street Journal Economic Forecast Survey was published on September 12, 2019.  The headline is “Economists Don’t See Path to 3% Growth in 2019.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

An excerpt:

The Trump administration’s goal of achieving economic growth of 3% or better is looking increasingly remote this year, according to forecasters surveyed by The Wall Street Journal.

Private-sector economists surveyed in recent days expect U.S. gross domestic product to expand an inflation-adjusted 2.2% this year on average, measured from the fourth quarter a year earlier. Forecasters expect economic growth will slow to 1.7% in 2020 and will be 1.9% in 2021.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 34.79%. The individual estimates, of those who responded, ranged from 10% to 67%.  For reference, the average response in August’s survey was 33.57%.

As stated in the article, the survey’s 60 respondents were academic, financial and business economists.  Not every economist answered every question.  The survey was conducted September 6 – September 10, 2019.

Economic Forecasts

The current average forecasts among economists polled include the following:

GDP:

full-year 2019:  2.20%

full-year 2020:  1.68%

full-year 2021:  1.85%

full-year 2022:  1.99%

Unemployment Rate:

December 2019: 3.67%

December 2020: 3.87%

December 2021: 4.09%

December 2022: 4.13%

10-Year Treasury Yield:

December 2019: 1.69%

December 2020: 1.97%

December 2021: 2.24%

December 2022: 2.41%

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Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of September 13, 2019, titled “The September 2019 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

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RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

Earnings Estimates Trends

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of August 9, 2019:

from page 9:

(click on charts to enlarge images)

trends of S&P500 EPS forecasts

from page 10:

S&P500 EPS 2009-2020

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Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of August 20, 2019, titled “Trends Of S&P500 Earnings Forecasts

_____

RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

The August 2019 Wall Street Journal Economic Forecast Survey – Notable Aspects

The August 2019 Wall Street Journal Economic Forecast Survey was published on August 8, 2019.  The headline is “Economists See Greater Chance of September Rate Cut, WSJ Survey Says.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

An excerpt:

The overwhelming majority of economists—87.8%—also see risks to the economic outlook as tilted to the downside. That was up from 69.6% last month and the highest level since the start of 2015. Most respondents mentioned trade as the main risk to the economy.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 33.57%. The individual estimates, of those who responded, ranged from 10% to 65%.  For reference, the average response in July’s survey was 30.10%.

As stated in the article, the survey’s respondents were academic, financial and business economists.  Not every economist answered every question.  The survey was conducted August 2 – August 5, 2019.

Economic Forecasts

The current average forecasts among economists polled include the following:

GDP:

full-year 2019:  2.21%

full-year 2020:  1.75%

full-year 2021:  1.80%

Unemployment Rate:

December 2019: 3.65%

December 2020: 3.90%

December 2021: 4.04%

10-Year Treasury Yield:

December 2019: 2.01%

December 2020: 2.19%

December 2021: 2.39%

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Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of August 9, 2019, titled “The August 2019 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

Earnings Estimates Trends

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of July 12, 2019:

from page 23:

(click on charts to enlarge images)

S&P500 earnings forecasts trends

from page 24:

S&P500 annual earnings since 2009

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Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of July 19, 2019, titled “Trends Of S&P500 Earnings Forecasts

_____

RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

The July 2019 Wall Street Journal Economic Forecast Survey – Notable Aspects

The July 2019 Wall Street Journal Economic Forecast Survey was published on July 12, 2019.  The headline is “President Trump’s Criticism of the Fed Hasn’t Shifted Perception of Its Independence, Economists Say.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

An excerpt:

Economists said they expected the Fed’s policy rate would average 1.99% at the end of the year, suggesting forecasters were largely split between those who saw the Fed cutting rates once this year and those who saw two rate cuts.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 30.10%. The individual estimates, of those who responded, ranged from 2% to 60%.  For reference, the average response in June’s survey was 30.07%.

As stated in the article, the survey’s respondents were 53 academic, financial and business economists.  Not every economist answered every question.  The survey was conducted July 5 – July 9, 2019.

Economic Forecasts

The current average forecasts among economists polled include the following:

GDP:

full-year 2019:  2.2%

full-year 2020:  1.75%

full-year 2021:  1.84%

Unemployment Rate:

December 2019: 3.61%

December 2020: 3.84%

December 2021: 4.06%

10-Year Treasury Yield:

December 2019: 2.18%

December 2020: 2.38%

December 2021: 2.58%

____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of July 16, 2019, titled “The July 2019 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

“CFO Signals” Report – Excerpts

Recently Deloitte released their “CFO Signals” “High-Level Summary” report for the 2nd Quarter of 2019.

As seen in page 2 of the report, there were 159 survey respondents.  As stated:

“Each quarter (since 2Q10), CFO Signals has tracked the thinking and actions of CFOs representing many of North America’s largest and most influential companies.

All respondents are CFOs from the US, Canada, and Mexico, and the vast majority are from companies with more than $1 billion in annual revenue. For a summary of this quarter’s response demographics, please see the sidebars and charts on this page. For other information about participation and methodology, please contact [email protected]

Here are some of the excerpts that I found notable:

from page 3:

Perceptions

How do you regard the status of the North American, European, and Chinese economies? Perceptions of North America declined slightly, with 79% of CFOs rating current conditions as good (down from 80% last quarter), and 24% expecting better conditions in a year (down from 28%). Perceptions of Europe slid to just 10% and 4%; China sits at 26% and 10%. Page 6.

What is your perception of the capital markets? Seventy-seven percent of CFOs say debt financing is attractive (up from 70%). Equity financing attractiveness rose for both public (from 25% to 40%) and private (27% to 35%) company CFOs. Sixty-four percent say US equity markets are overvalued, up from 46% and similar to the levels from 2018. Page 7.

Sentiment

What external/internal risks worry you the most? CFOs express strong concerns about the impact of US trade policy on global growth and about US political turmoil. Talent is the dominant internal concern, with newly emerging concerns about rising labor costs. Page 8.

Compared to three months ago, how do you feel about the financial prospects for your company? The net optimism index declined from last quarter’s +16 to just +9 this quarter—the second-lowest reading in three years. Thirty percent of CFOs express rising optimism (32% last quarter), and 21% express declining optimism (16% last quarter). Page 9.

Expectations

What is your company’s business focus for the next year? CFOs indicate a bias toward revenue growth over cost reduction (48% vs. 29%), investing cash over returning it (51% vs. 18%), current offerings over new ones (47% vs. 32%), and current geographies over new ones (66% vs. 13%). Page 10.

How do you expect your key operating metrics to change over the next 12 months? YOY revenue growth expectations fell from 4.8% to 3.8%, earnings growth slid from 7.1% to 6.1%, and hiring fell from 2.1% to 1.9% (all sit at twoyear lows). Dividend growth declined from 3.9% to 3.7%, the lowest level in two years. Capital spending rose substantially from 5.9% to 7.7%. Page 11.

Special topic: Company growth, profitability, and investment

If the US experiences a pullback, what type of pullback do you expect? About 80% expect a downturn to be mild, and they are split on whether that downturn will be short or prolonged. Pages 12.

What industry and company factors are affecting your business planning? All industries expected rising industry revenue over declining, with Manufacturing lowest and Healthcare/Pharma highest. All industries except Technology and Retail/Wholesale claimed to be in profitability mode over growth mode; all except Financial Services were biased toward market expansion over consolidation. Overall, companies claimed substantial talent constraints, but not capital constraints or shareholder pressure to use/return cash. Page 13.

What are your company’s top uses of cash this year? Top uses revolve around investment for growth and productivity improvement. There are substantial public/private and industry differences when it comes to returning cash, paying down debt, and investing for growth versus for productivity. Page 14.

Which markets will be important to your company’s growth over the next five years? Predictably, CFOs ranked their home markets most important. The US ranked universally high, but the importance of Canada and Mexico to US CFOs seems to have declined since we last asked in 4Q15; China is the most important market outside North America on the whole. Page 15.

What is your approach to growth investments over the next three years? The vast majority of CFOs say they are making focused growth investments instead of spreading investments across multiple opportunities; capital-constrained companies are the most likely to be avoiding major investment. Page 16.

On which areas will you personally focus for the next year? Three areas comprise the top tier for CFOs’ personal focus: profitability, corporate strategy, and growth. Other focus areas were substantial for particular industries. Page 17.

from page 9:

Sentiment

Optimism regarding own-companies’ prospects

Own-company optimism continues to sit among its lowest levels in the last three years. The US is highest at just +15; Canada and Mexico are both  overwhelmingly negative.

Last quarter’s net optimism rebounded somewhat from the prior quarter’s three-year low of +3 to a modest +16. This quarter it retreated to +9 and sits at the second-lowest reading in three years. Thirty percent of CFOs expressed rising optimism (down from 32%), and 21% cited declining optimism (up from 16%).

Net optimism for the US declined from last quarter’s +19 to +15, the second-lowest level in the last three years. Canada fell sharply from last quarter’s +25 to -25. Mexico rose from last quarter’s dismal -60 to a still-poor 43, tying the second lowest point in the last two years.

Manufacturing, Retail/Wholesale, and Healthcare/Pharma were comparatively pessimistic (+2, +6, and -27, respectively). Technology was strongest at +20, with Financial Services and Energy/Resources slightly behind at +15.

Please see the full report for industry-specific charts. Note that industry sample sizes vary markedly and that the means are most volatile for the least-represented. Due to a very small sample size, T/M/E was not used as a comparison point this quarter.

from page 11:

Expectations

Growth in key metrics, year-over-year

Expectations for revenue, earnings, dividends, hiring, and wages all declined to their lowest levels in the last two years; capital spending rose but remains below the two-year average.

Revenue growth declined from 4.8% to 3.8%, its lowest level since 4Q16. The US slid to a twoyear low. Canada dipped slightly, and remained below its two-year average. Mexico declined to a two-year low. Technology and Energy/Resources again lead; Healthcare/Pharma trails.

Earnings growth declined from 7.1% to 6.1%, the lowest level since 3Q16. The US fell to a twoyear low. Canada fell and remains below its twoyear average. Mexico dipped and remained below its two-year average. Retail/Wholesale is highest; Manufacturing and Healthcare/Pharma are lowest.

Capital spending growth rose substantially from 5.9% to 7.7%, just below the two-year average. The US rose to just above its two-year average. Canada and Mexico declined and sit below their two-year averages. Healthcare/Pharma and Retail/Wholesale are again highest; Services is lowest.

Domestic personnel growth slid from 2.1% to 1.9%, the lowest level since 3Q16. The US fell to its lowest level in more than two years. Canada slid below its two-year average. Mexico rose, but remains below its two-year average. Services and Technology lead; Energy/Resources trails.

Dividend growth declined from 3.9% to 3.7, the lowest level in two years.

Please see the full report for industry-specific charts. Note that industry sample sizes vary markedly and that the means are most volatile for the least-represented. Due to a very small sample size, T/M/E was not used as a comparison point this quarter.

Among the various charts and graphics in the report are graphics depicting trends in “Own Company Optimism” on page 9 and “Economic Optimism” found on page 6.

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RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC (revsd.com) is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

Earnings Estimates Trends

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of June 14, 2019:

from page 22:

(click on charts to enlarge images)

S&P500 earnings forecasts

from page 23:

S&P500 EPS 2009-2020

_____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of June 18, 2019, titled “Trends Of S&P500 Earnings Forecasts

_____

RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

The June 2019 Wall Street Journal Economic Forecast Survey – Notable Aspects

The June 2019 Wall Street Journal Economic Forecast Survey was published on June 13, 2019.  The headline is “Trump Tariffs Are Short-Term Pain Without Long-Term Gain, Economists Say.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

An excerpt:

Looking at the economy as a whole, 74% of economists said they saw the risks for growth tilted to the downside—up from 58% in May and 47% this time a year ago.

Nearly half of economists in the latest survey, 48.8%, expect the next recession in 2020. That was up from just over a third in the May survey. Some 36.6% predict the next downturn will start in 2021, down from just over half in last month’s survey. Just under 5% expect it will begin this year, up from just over 2% in May.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 30.07%. The individual estimates, of those who responded, ranged from 1% to 60%.  For reference, the average response in May’s survey was 22.79%.

As stated in the article, the survey’s respondents were 59 academic, financial and business economists.  Not every economist answered every question.  The survey was conducted June 7 – June 11, 2019.

Economic Forecasts

The current average forecasts among economists polled include the following:

GDP:

full-year 2019:  2.2%

full-year 2020:  1.6%

full-year 2021:  1.8%

Unemployment Rate:

December 2019: 3.6%

December 2020: 3.9%

December 2021: 4.2%

10-Year Treasury Yield:

December 2019: 2.34%

December 2020: 2.48%

December 2021: 2.60%

____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of June 13, 2019, titled “The June 2019 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

Earnings Estimates Trends

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of May 17, 2019:

from page 21:

(click on charts to enlarge images)

S&P500 EPS forecasts 2019 & 2020

from page 22:

S&P500 EPS 2009-2020

_____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of May 22, 2019, titled “Trends Of S&P500 Earnings Forecasts

_____

RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

The May 2019 Wall Street Journal Economic Forecast Survey – Notable Aspects

The May 2019 Wall Street Journal Economic Forecast Survey was published on May 9, 2019.  The headline is “Nearly 70% of Economists Expect Faster Wage Growth Over Next Year, WSJ Survey Says.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

An excerpt:

Just over a third of economists, 35.7%, expect the next recession to start in 2020, while 52.4% expect it will start in 2021. That marked a shift from the prior two surveys, when nearly half of respondents expected the next recession to start in 2020. In April, 40% predicted the next downturn will start in 2021, while in March about a third forecast a downturn to begin in 2021.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 22.79%. The individual estimates, of those who responded, ranged from 0% to 45%.  For reference, the average response in April’s survey was 25.80%.

As stated in the article, the survey’s respondents were 60 academic, financial and business economists.  Not every economist answered every question.  The survey was conducted May 3 – May 7, 2019.

Economic Forecasts

The current average forecasts among economists polled include the following:

GDP:

full-year 2019:  2.3%

full-year 2020:  1.8%

full-year 2021:  1.8%

Unemployment Rate:

December 2019: 3.6%

December 2020: 3.8%

December 2021: 4.1%

10-Year Treasury Yield:

December 2019: 2.75%

December 2020: 2.80%

December 2021: 2.82%

____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of May 9, 2019, titled “The May 2019 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.