Canaccord Genuity Morning Coffee on Portfolio Strategy: Hey, Good Lookin' !
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Canaccord Genuity Morning Coffee on Portfolio Strategy: Hey, good lookin'!
Through April 27, 59% of the S&P 500 has reported earnings and Canaccord Genuity U.S. Portfolio Strategist Tony Dwyer notes the following observations: 1) Blended growth rate of those that have reported vs. those that are expected to report is 7.1% vs. a year ago, which is well above the expected 3.2% as of April 1; and 2) 72% have reported above analyst expectations and in aggregate, companies are reporting earnings that are 5.3% above expectations, which is well above the historical average beat of 3% since 1994. Next, he looks at the adage “sell in May and go away.” While there is some debate as to whether the Fed will raise rates at the end of 2014 or maybe even in 2013, there is very little doubt interest rates will hold steady through the end of 2012. History strongly suggests positive equity market returns for May-October (M-O) during periods of steady interest rates. Since 1942 there were 24 years with rates held steady during the M-O period. The median S&P 500 seasonal gain during those years was 4.6% with 17/23 being positive. Interestingly, Dwyer notes that in the years that followed any of the six losing years, the median M-O and annual gain was 5.55% and 21.3%, respectively, with no negative occurrences.
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Through April 27, 59% of the S&P 500 has reported earnings and Canaccord Genuity U.S. Portfolio Strategist Tony Dwyer notes the following observations: 1) Blended growth rate of those that have reported vs. those that are expected to report is 7.1% vs. a year ago, which is well above the expected 3.2% as of April 1; and 2) 72% have reported above analyst expectations and in aggregate, companies are reporting earnings that are 5.3% above expectations, which is well above the historical average beat of 3% since 1994. Next, he looks at the adage “sell in May and go away.” While there is some debate as to whether the Fed will raise rates at the end of 2014 or maybe even in 2013, there is very little doubt interest rates will hold steady through the end of 2012. History strongly suggests positive equity market returns for May-October (M-O) during periods of steady interest rates. Since 1942 there were 24 years with rates held steady during the M-O period. The median S&P 500 seasonal gain during those years was 4.6% with 17/23 being positive. Interestingly, Dwyer notes that in the years that followed any of the six losing years, the median M-O and annual gain was 5.55% and 21.3%, respectively, with no negative occurrences.
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