The Recession Has Offically Hit in Fantasyland

The Recession Has Officially Hit in Fantasyland – Uh Oh!

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

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This recession is horrible isn’t, it? First quarter growth pacing at 2.8%, only 75% of companies have topped earnings, 2019 earnings estimates rising. The S&P 500 is less than 1% off its all-time high.

It is the recession that keeps on giving. The recession that is surely not coming 2019 –well maybe in fantasyland.

Earnings Are Stronger Than Expected

Earnings for the week continue to be better than expected with 75.3% of the 77 companies in the S&P 500 topping estimates, according to data from S&P Dow Jones Indexes. The average since the second quarter of 2012 is 69.7%, with a standard deviation of 4.36%. It makes the current results to this point better than the norm.

eps beats

(Data for S&P Dow Jones)

Additionally, the number of companies that have missed estimates is at 16.9%, versus an average of 21.2% and a standard deviation of 3.2%.


(Data for S&P Dow Jones)

Estimates Tick Higher

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The better than expected results to this point has led to a minor uptick in 2019 earnings estimates. Estimates for 2019 increased to $165.02 per share from $164.99 per share last week.

eps est.


(Data for S&P Dow Jones)

Still Undervalued

It leaves the S&P 500 still trading around 15.6 times 2020 earnings estimates and well below the historical average of about 17 to 18 times one-year forward earnings.


More good news —GDPNow ticked up to 2.8% for the first quarter this past week. The strong GDPNow reading from the Atlanta Fed was a result of the better than expected retail sales in March, which came in at 1.6% versus estimates for 0.8%.  Leading indicators came in at 0.4% versus estimates of 0.03%.

I don’t know, if this what a recession is like then why was everyone freaking about it?

Have a great weekend


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Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.

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