It’s been a good quarter and a good year so far; much better than most analysts predicted.
In fact the modest acceleration in GDP growth that Riverplace Capital thought would benefit equity valuations seems to be happening. However, the most important, but related, factor has been excellent earnings accompanied by revenue growth. The one sector that had hurt aggregate earnings for the S&P 500 was the energy sector. That sector’s performance has improved as a result of cost cutting and a modest increase in pricing. Other areas of the economy, with a few exceptions, are doing quite well.
So how does the rest of the year stack up? It is dangerous to simply extrapolate trends; unforeseen events can come along and derail them. But what we can see is good. The possibility of a business friendly tax overhaul, less regulation, and perhaps even more infrastructure spending should reinforce an already positive outlook. None of this is likely in just the next few months, but anticipation can drive behavior and results.
So what do we see for the remainder of this year – good results!
Stay steady, my friends.
The Lonely Bull