May’s M-PMI raises yet another warning flag about the flagging prospects for S&P 500 revenues. Nevertheless, I still expect that global nominal GDP will increase by 5% this year and 5% next year. Revenues should grow by at least as much. However, the latest data points aren’t supportive of this relatively upbeat outlook.
The M-PMI is highly correlated with the y/y growth rate in S&P 500 revenues. The latter rose only 1.3% during the first quarter. The purchasing managers’ index suggests that this growth rate might have worsened rather than improved during the second quarter, when I expected to see an improvement.
I monitor the consensus expectations for S&P 500 revenues and earnings per share based on weekly data compiled by Thomson Reuters I/B/E/S. Their revenue estimates for 2013 and 2014 have dropped sharply during the first four weeks of May to new lows. They now expect revenues to grow 2.2% this year and 4.4% next year.
Today’s Morning Briefing: Mood-Altering Drugs. (1) All Fed all the time. (2) Making the pain go away. (3) Lockhart giveth what Williams taketh away. (4) M-PMI is bad news for revenues. (5) Industry analysts curbing their enthusiasm for revenues. (6) Yet forward earnings rising to new highs. (7) Industry analysts see more upside to margins. (8) Focus on overweight-rated Financials. (More for subscribers.)
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