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Weekly Chartology And Prophetology
This week's most relevant estimates and charts from Goldman Sachs:
On Earnings:
Our top-down EPS forecast of $76 and $90 for 2010 and 2011 reflect +33% and +20% growth, respectively. Our pre-provision and write-down EPS forecasts are $81 for 2010 and $91 for 2011. Bottom-up consensus forecasts a 38% increase in 2010 to $79, and a 21% increase in 2011 to $95.
On Valuation:
Top-down, the S&P 500 trades at an NTM P/E of 14.3X (13.4X on pre-provision EPS). Bottom-up, it trades at NTM P/E of 14.1X and LTM P/B of 2.3X
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More sentiment metrics reached new 2-year highs this past week:
Courtesy of GROW weekly update:
Sentiment often peaks before a major change in market direction. Look for the market to keep sliding down.
Sentiment often peaks before the market changes direction... amusing that it continues to peak after the market has changed... deflationary depression continues.
they predicting gdp and unemployment, both, up thru 2011. that's a no jobs "recovery". seems like that could have some ramifications.
So were in a houseless, jobless, consumerless, creditless, manufacturingless recovery?
Um ok..More kool-aid for me please.
You know, I agree with your points totally.
I just want to say one thing... why does everybody dis Kool Aid? That shit is good! LOL.
One guy before I was born used it to poison some idiot cult members, and now it's like the posterchild for being a moron everywhere.
Funny but the shoe fits. You shouldn't be drinking that crap anyway.
But that is what is supposed to be great about America. If you want corn syrup then drink it.
It wasn't even Kool-Aid. It was Flavor Aid.
GS = BS
Well said.
I still think that housing will dip some more, for a plethora of factors.
Also, it's nice to see Goldman pumping the market now. They seem to have a pattern of telling clients one thing, and trading another way. If they're telling clients to be bullish, than it seems that they may actually be bearish.
I think the sentiment indexes are a lag to the market highs we saw this early winter...the market declines will precede the sentiment declines for a while...eventually with enough downturn, sentiment will precede market...but for now, I see these as sentiment numbers as lagging indicators. But hey, I hope I'm wrong and ecomony is on recovery, I have real job and would rather keep it and lose some money trading than vice versa.
GS would sell junk bonds to their own mother.
Jackals don't have mothers
I always love forecasts from GS and people of their ilk: 33% growth in 2010 and 20% in 2011. The long-term nominal growth rate for S&P 500 earnings is roughly 7% which is consistent with long-term equity returns.
So if earnings are +33% in 2010 and +20% in 2011, earnings growth beyond 2011 will sharply decelerate (below 7%) and likely be negative in the out years.
Extrapolation is not a good forecasting technique. Some interesting datapoints:
2000-2010E CAGR S&P 500 Earnings = 2.9%
1990-2000A CAGR S&P 500 Earnings = 9.5%
2001-2011E CAGR S&P 500 Earnings = 8.8% (using $91 in 2011)
With margins at record levels, hard to make the case for higher compound earnings growth (8.8%) vs historical (7.0%). Requires revenue growth which continues to be elusive.
Requires revenue growth which continues to be elusive.
Now there is some Sugar Free Kool-Aid for ya.
I really don't know how GS have the balls to make these forecasts. Intellectually its a futile exercise. But then if you have an executive who can talk about 20 standard deviations to the right you have an institution that has got talking codswallop down to a fine art.
One must always remember that this is Goldman Sachs. So this info must be viewed through the lens of triple-reverse psychology, from the firm that regularly trades against its own clients.
fwiw, having dealt with GS Public Information, ie, we get a sliver of the proprietary stuff, has meaning, interpatation:
GS, is bullish for the year, they list strategy for bullish, high leverage stuff, which means there earnings will beat, regardless of sales, low leverage will struggle
you can extrapolate that too all business when choosing your sector
so, generally these guys are expecting volatility this year, ups and downs and all around
fwiw, who do you think is shorting here, who had too by law reduce there VAR by december
with there VAR reduced control is lessened, so tread lightly as always
Those dumb ass cat pukes forgot to apply $ 90 oil for 2010 and $110 oil for 2011 in their projections of income and valuations. Zero growth at $ 90, total collapse of the economy at $ 110.
What GDP growth rate at $50 oil, cos that's
where it's headed.
A wash out might take her under $40.
One doesn't need to worry about earnings for the latest squid CONviction buy list addition.....Sun Trust bank (STI) is not expected to earn a profit throughout 2010 by all analysts who are covering this beauty.
Wondering if GS had a little "huddle" coffee klatch thingee when STI was at 20/21 over one month ago just before its run up to its recent 52 wk high of 25.92?????
p/e of 14.3?
I call bullshit!
http://www.decisionpoint.com/TAC/SWENLIN.html
I haven't read this report yet, but I'm going to take a wild stab in the dark and predict that a company that makes more money when other people put more money in the market is recommending that other people put more money in the market