Q1 S&P 500 Group EPS Growth

乡下人

The index as a whole has seen earnings decline by 16.9% versus the first quarter of 2007. Only 6 of the 24 groups saw earnings declines, however. These declines came in banks, diversified financials, insurance, real estate, consumer durables & apparel and retailing. No surprises there. The biggest gains in earnings came in automobiles & components (which had a low starting point), energy, software, tech hardware, materials and media. From my point of view, that means US economy are acturally OK whethering the cridit crisis except the banking sector. Bulls, be alert!

乡下人

maserati

Inflation has a big impact on earnings. With a real inflation rate of 11%, earnings are always overstated.

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原帖由 maserati 于 2008-5-15 13:39 发表 Inflation has a big impact on earnings. With a real inflation rate of 11%, earnings are always overstated.

 

I would agree that inflation is a good reason for one to be bearish towards the economy, whether it is a good reason for one to be bearish towards the stock market remains debatable.

乡下人

I remembered I read a book saying that Inflation is good for stocks. With the negative real interest rates, people will put their money elsewhere, like commodities and stocks.

maserati

原帖由 乡下人 于 2008-5-15 13:35 发表 I remembered I read a book saying that Inflation is good for stocks. With the negative real interest rates, people will put their money elsewhere, like commodities and stocks.

 

well, the argument here is that earnings growth is overstated by high inflation. When you say Inflation is good for stocks, that means stock market has to exceed inflation rate in order to give you positive return.

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原帖由 乡下人 于 2008-5-15 14:35 发表 I remembered I read a book saying that Inflation is good for stocks. With the negative real interest rates, people will put their money elsewhere, like commodities and stocks.

 

Yes. In stock market, we play money in nominal term, not in real term. This suggests that inflation (defined as the difference between money in nominal term and money in real term) is kind of transparent to the stock market. One may still argue that stock market will follow the economy in the long run. But nobody is certain that economy will keep the downturn in the long run.

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原帖由 maserati 于 2008-5-15 14:46 发表   well, the argument here is that earnings growth is overstated by high inflation. When you say Inflation is good for stocks, that means stock market has to exceed inflation rate in order to g ...

 

totally agree. my point was not that the earning number is good. i just wanted to be optmistic that the earning is not that bad, and there is signs the earning is turning to be good in future.