Tuesday, April 19, 2016

Bonddad Tuesday Linkfest

We'll be doing our regular monthly economic review on Thursday, April 28th at 3PM CST.  You can sign up at this link.

Oil is Still in a Short-Term Uptrend

Leaving the EU Would Cost the UK 6% of GDP (FT)

The idea of Britain negotiating a deal to have full access to the European single market while not being a member of the EU is “complete fantasy”, George Osborne has said, as he stepped up the attack on the “economically illiterate” Leave camp.

On Monday the Treasury published its long-awaited estimates of what the long-term consequences of leaving the EU would be for the UK economy. Launching the Treasury document alongside other cabinet ministers in Bristol, the chancellor claimed the UK economy would be 6 per cent smaller if the country was to quit the bloc, leaving Britain with diminished influence and less trade.

A British exit would leave a £36bn hole in the public finances equivalent to 8p on the basic rate of income tax, Mr Osborne said.

  • 35 S&P 500 companies have reported earnings thus far, according to S&P CapIQ's most recent earnings report.
  • 71% have reported earnings better than Street expectations. 
  • Collectively, the S&P 500 has reported a +8.2% EPS surprise.
  • Of those companies that have announced earnings, 49% have shown double-digit or better Y/Y growth.Overall, EPS growth thus far is -8.3%.95 companies report this week, including Intel, Yahoo and McDonald's.
  • Thus far, consumer discretionary companies have outperformed (11.3% growth), and materials companies are lagging (-17.8%).

Take a look at the overall growth rates, and you can see kind of a similar situation, where growth was relatively OK and then fell apart in the Great Recession. And then we've had these really great-looking growth numbers for auto sales that have everybody so excited. For example, in 2012, we grew as fast as 13%. Well, that was related to the recovery, not to some great new demand for automobiles, and since then we've fallen back a little bit and growth in 2015 was about 5.5% or so.

Well, now, looking ahead, we don't see any particular reason for automobiles to grow any faster than overall population growth and maybe a little business growth. So, we expect 1% to 3% growth out of the auto industry in the years ahead, not the same big 13% we got in 2012. Nothing to worry about, but again, a slower growth rate than people have been anticipating.