Raise a Little More Cash

Investor’s first read – Daily edge before the open
DJIA: 18,153
S&P 500: 2,130
Friday July 8, 2016 2:44 p.m.
SPECIAL BULLETIN
The Employment Situation report was a big surprise today with 287,000 jobs added in June. Also surprising was the downward revision of May’s jobs to 11,000 jobs added from 38,000, all of which suggests May should be higher and June lower. The Street liked the numbers, but Q2 earnings will be released in coming weeks. Along with that, the Street will have to deal with revisions of future earnings and corporate guidance. Expect those to be lower than projected.
A stronger U.S. dollar stands to adversely impact Q3 and Q4, S&P 500 earnings, which the Street was counting on to justify these prices.
Earnings projections for Q2 call for a drop of 5.3% vs. an estimate of a drop of 2.8% three months ago. While oil and related industries account for much of this decline, nine sectors have lower growth rates now than at Mar.31. This would bring the P/E for the S&P 500 to 16.4 compared to a 5-year average on 14.6 (data FactSet.com). A Q2 decline would be the first time Y/Y earnings have declined five consecutive quarters since Q3 2008 – Q3 2009, the Great Recession.
Today’s surge to a new 52-week high should attract selling by traders and
some longer term investors who feel a 5-day, 7% move in the S&P 500 is a gift.
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk

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