Market Perspectives - August 2019

1. Market Perspectives - August 2019
Experience Insight Impact
Overview: Trade headlines, as well as interest rate movements, have dominated the investor
psyche as of late. With second quarter earnings season largely complete, we revisit the state of
corporate revenue and earnings growth domestically. Earnings were originally expected to
decline slightly year-over-year this quarter, but the trend appears on track to finish with positive
growth.
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2. Quarterly Growth
Experience Insight Impact 2
With 480 companies in the S&P 500 having reported earnings, sales growth is 3.62% and earnings
growth is 1.74% for the second calendar quarter of 2019. While this is a relatively slow rate of growth
compared to recent years, the continuation of the positive trend was a surprise to the upside.
Source: Bloomberg

3. Results vs. Expectations
Experience Insight Impact 3
Earnings growth was approximately 5% better than originally expected while sales are about 0.5%
above initial expectations. Companies continue to generally outperform expectations albeit at a
declining growth rate.
Source: Bloomberg

4. Historical Growth and Future Expectations
Experience Insight Impact 4
The middle line represents the current quarter (CQ2). All quarters to the left represent recent history and the quarters to the right are
future expectations. Expectations for next quarter once again lean toward a slightly negative earnings growth trend. Thereafter, market
participants expect positive trends will resume. We are closely watching economic trends and macro-economic news (such as the
trade war with China) for signs as to whether companies will continue to outperform expectations.
Source: Bloomberg

5. Increase in Companies Reporting Positive Growth
Experience Insight Impact 5
For the last 3 quarters, the proportion of S&P 500 companies with positive year-over-year earnings growth has been slipping. This
trend was reversed during the second quarter, showing an improvement in this proportion.
Source: Bloomberg

6. Market Perspective - August 2019
Experience Insight Impact
Conclusion: With the global macro-economic picture somewhat uncertain due to a rapidly
changing investment landscape, we tend to rely on the messages of the companies we are
investing in. To date, while growth has slowed, the stability of underlying profit trends has
persisted. We are closely monitoring these important benchmarks for signs of change.
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7. Disclaimer
Experience Insight Impact
Opinions expressed in this commentary may change as conditions warrant and are for
informational purposes only. Information contained herein is not intended to be personal
investment advice for any specific person for any particular purpose. We utilize information
sources that we believe to be reliable but cannot guarantee the accuracy of those sources. Past
performance is no guarantee of future performance; investing involves risk and may result in loss
of capital. No graph, chart, formula or other device can, in and of itself, be used to determine
which securities to buy or sell, or when to buy or sell such securities, or can assist persons in
making those decisions. Consider seeking advice from a professional before implementing any
investing strategy.
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