Hello, this is James Mayer, Branch Manager, from the Huffman Mayer Wealth Management Group of Wells Fargo Advisors. We are excited to share February’s edition of “The Market Recap” Let’s see three topics Phil has for us.
PHIL: Thanks James
· According to FactSet, with 79% of S&P 500 having reported results for 4Q23, 75% have beaten the consensus EPS estimate from Wall Street, compared with an average of 77% over the past 5 years and 74% over the past decade. Interestingly, the market is rewarding companies who beat expectation more than is typical. From two days before to two days after reporting, the average gain among companies that beat estimates has been +1.5%, versus an average “pop” of 1.0% for companies that beat.
· U.S. GDP grew by 3.1%, and growth at home is expected to continue into 2024, according to the Atlanta Fed’s GDP Now model, which forecasts 1Q24 growth of 2.9%. However, overseas things are less rosy, as the U.K.’s Office of National Statistics recently declared the start of a recession, Germany has seen three consecutive quarters of year-over-year economic contraction, and signs of serious economic trouble in China (where the economy is growing, but unemployment is higher than normal and property values have fallen significantly). China, Germany, and the U.K. rank 2nd, 4th, and 6th in terms of Global GDP.
· Along with most other categories of inflation, the cost of food has been increasing more slowly since late in 2022. However, this is truer for “Food at home” (using the BLS definitions) than “Food away from home” (aka, eating at restaurants). While January’s data showed a 1.1% increase in the cost of food at home, prices for eating out were up 5.1% y/y.
In Summary:
· With 79% of results in, 75% of S&P 500 companies have beaten EPS estimates, and companies that beat are being rewarded by 1.5%, vs. 1.0% normally.
· U.S. GDP is growing in the low single digits, while the U.K., Germany, and China are all either in recession or showing signs of economic weakness.
· Inflation on eating at home has mostly passed, with a reading of 1.1% inflation in January. Restaurant inflation has been more stubborn, up 5.1% y/y.
Now let’s see what James & Ryan have to say about March!
JAMES: Thanks Phil! We all love March because of basketball, St. Patty’s Day, and of course Spring break.
RYAN: That’s right James and we have been very lucky this year so far with the weather. I guess Phil was right.
JAMES: We hope the weather stays that way to especially for Spring break. Ryan did you know according to Factcity.com, every year between 1.5 and 2 million students in the US go on spring break.
RYAN: Yes James and they collectively spend over $1 billion. Have you ever wondered where “spring break” originated?
JAMES: Yes Ryan. According to a story written by USA Today, the origins of Spring break can be traced back to ancient Greek and Roman celebrations of spring because it was the season of fertility and new beginnings.
RYAN: James have you planned anything for spring break?
JAMES:????
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As always stay happy, safe, and healthy and hopefully we will see you very soon.