Market Briefing: S&P Revenues & the Economy December 14, 2 Dr. Edward Yardeni 16-972-7683 eyardeni@ Joe Abbott 732-497-36 jabbott@ Mali Quintana 48-664-1333 aquintana@ Please visit our sites at www. blog. thinking outside the box
Table Of Contents Table Of Contents Revenues & Earnings 1 Revenues & Nominal GDP 2-3 Revenues, World Production, & Exports 4 Revenues & Leading Indicators Revenues & US Economic Indicators 6 Revenues & Global Oil Demand 7 Revenues & US Business Sales 8 Revenues & US Factory Orders 9 Revenues & US Factory Shipments 1 Revenues & US Exports 11 Revenues & US PMIs 12 Revenues & Super-PMIs 13 Revenues, CRB, & TWD 14 Revenues & US GDP Revenues & US Tax Receipts 16 Revenues & Forward Earnings 17 Revenues: Industrial Composite 18 December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
13 12 Figure 1. Revenues & Earnings S&P REVENUES PER SHARE: FORWARD (TR data) & ACTUAL (S&P data) (dollars) 13 12 1 12/3 1 9 8 7 Revenues Per Share 2-Week Forward Revenues* Actual Revenues (quarterly, annualized, nsa) 9 8 7 6 24 2 26 27 28 29 21 211 212 213 214 2 216 217 6 * Time-weighted average of consensus estimates for current and next year. Monthly through December 2, weekly thereafter. Source: Standard & Poor s Corporation (for actual revenues) and Thomson Reuters I/B/E/S (for forward revenues). 13 Figure 2. S&P FORWARD REVENUES & EARNINGS PER SHARE 12/1 13 12 12/3 12 11 11 1 1 9 9 8 Forward Revenues* (1177.9) 8 7 Forward Earnings* (127.4) 7 6 26 27 28 29 21 211 212 213 214 2 216 217 6 * Time-weighted average of consensus estimates for current and next year. Source: Thomson Reuters I/B/E/S and Standard & Poor s Corporation. Page 1 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
2 Figure 3. S&P REVENUES vs. NOMINAL GDP Revenues & Nominal GDP 2 1 1 - - -1-1 - -2-2 Nominal GDP (3.1) S&P Revenues (dollars per share) (-3.2) 94 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: US Department of Commerce, Bureau of the Census and Standard & Poor s Corporation. - -2-2 2 Figure 4. S&P REVENUES vs. NOMINAL GDP 2 1 1 - - -1-1 - -2-2 Nominal GDP Goods (1.6) S&P Revenues (dollars per share) (-3.2) 94 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: US Department of Commerce, Bureau of the Census and Standard & Poor s Corporation. - -2-2 Page 2 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
2 Figure. S&P REVENUES & NOMINAL GDP Revenues & Nominal GDP 2 1 1 - - -1-1 - -2-2 Nominal GDP (3.1) Total Revenues (-4.) 94 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: US Department of Commerce, Bureau of the Census and Standard & Poor s Corporation. - -2-2 2 Figure 6. S&P REVENUES vs. NOMINAL GDP 2 1 1 - - -1-1 - -2-2 Nominal GDP Goods (1.6) Total Revenues (-4.) 94 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: US Department of Commerce, Bureau of the Census and Standard & Poor s Corporation. - -2-2 Page 3 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
Revenues, World Production, & Exports 33 31 29 27 Figure 7. S&P REVENUES & WORLD INDUSTRIAL PRODUCTION & EXPORTS World Industrial Production (2 = 1) World Exports Volume (2=1) Sep Sep 1 2 23 21 19 S&P Revenues (dollars per share, nsa) 17 13 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Netherlands Bureau for Economic Policy Analysis and Standard & Poor s Corporation. 31 29 27 2 23 21 19 17 Figure 8. S&P REVENUES & WORLD EXPORTS S&P Revenues (dollars per share, nsa) World Exports: Value (trillion dollars, 12-month sum) 2 18 16 14 12 1 8 6 13 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: International Monetary Fund (IMF) and Standard & Poor s Corporation. 4 Page 4 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
13 12 11 Figure 9. Revenues & Leading Indicators OECD LEADING INDICATORS vs. S&P REVENUES 2 1 1 99 98-1 97 OECD Leading Indicators (amplitude adjusted, nsa*) -2 96 9 94 S&P Revenues Per Share 1998 1999 2 21 22 23 24 2 26 27 28 29 21 211 212 213 214 2 216 217-3 -4 * A reading above 1 that is rising predicts expansion, above 1 and falling a downturn, below 1 and falling a slowdown, and below 1 and rising a recovery. Source: Standard & Poor s Corporation and Haver Analytics. 13 12 11 Figure 1. OECD LEADING INDICATORS vs. S&P REVENUES 2 1 1 99 98-1 97 US Leading Indicators (amplitude adjusted, nsa*) -2 96 9 94 S&P Revenues 1998 1999 2 21 22 23 24 2 26 27 28 29 21 211 212 213 214 2 216 217-3 -4 * A reading above 1 that is rising predicts expansion, above 1 and falling a downturn, below 1 and falling a slowdown, and below 1 and rising a recovery. Source: Standard & Poor s Corporation and Haver Analytics. Page / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
Revenues & US Economic Indicators 31 Figure 11. S&P REVENUES & US COINCIDENT ECONOMIC INDICATORS 1 29 27 S&P Revenues (dollars per share, nsa) 11 2 Coincident Economic Indicators (24 = 1) 23 1 21 9 19 9 17 8 13 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Conference Board. 8 31 Figure 12. S&P REVENUES & US LEADING ECONOMIC INDICATORS 16 29 27 S&P Revenues (dollars per share, nsa) 14 2 23 Leading Economic Indicators (21 = 1) 12 21 1 19 17 8 13 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Conference Board. 6 Page 6 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
Revenues & Global Oil Demand 3 Figure 13. S&P REVENUES & WORLD CRUDE OIL DEMAND 1 27 S&P Revenues (dollars per share, nsa) 9 2 World Oil Demand (million barrels per day, 12-month average) 9 22 8 2 8 17 7 7 12 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Institute Supply Management. 6 2 2 Figure 14. S&P REVENUES & WORLD CRUDE OIL DEMAND 4 1 3 2 1 - -1 S&P Revenues (using dollars per share) (-3.2) -1-2 - World Oil Demand (using 12-month average) (2.2) -3-2 -4-2 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Institute Supply Management. - Page 7 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
Revenues & US Business Sales 31 Figure. S&P REVENUES & US BUSINESS SALES 18 29 27 Business Sales* (trillion dollars, saar) 16 2 S&P Revenues (dollars per share, nsa) 14 23 12 21 19 1 17 8 13 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 6 * Manufacturing and trade sales. Source: US Department of Commerce, Bureau of the Census and Standard & Poor s Corporation. 2 Figure 16. S&P REVENUES & US BUSINESS SALES 2 1 1 - - -1-1 - -2-2 S&P Revenues* (-3.2) Business Sales** (-2.7) 94 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 - -2-2 * Using US dollars per share and based on companies in the S&P index at the start of each quarter. ** Manufacturing and trade sales. Source: US Department of Commerce, Bureau of the Census and Standard & Poor s Corporation. Page 8 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
Revenues & US Factory Orders 29 27 Figure 17. S&P REVENUES & US MANUFACTURING ORDERS 7 6 2 23 6 21 19 4 17 S&P Revenues (dollars per share, nsa) 4 13 Total New Factory Orders (billion dollars, saar) 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Census Bureau. 3 3 3 2 Figure 18. S&P REVENUES & US MANUFACTURING ORDERS 3 2 1 1-1 -1-2 -3-4 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Census Bureau. S&P Revenues (using dollars per share) (-3.2) Total New Factory Orders (-4.) -2-3 -4 Page 9 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
Revenues & US Factory Shipments 3 Figure 19. S&P REVENUES & US MANUFACTURING SHIPMENTS 6 6 2 2 4 1 S&P Revenues (dollars per share, nsa) Total New Factory Shipments (billion dollars, saar) 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Census Bureau. 4 3 3 2 Figure 2. S&P REVENUES & US MANUFACTURING SHIPMENTS 2 1 1 - - -1-1 - -2 S&P Revenues (using dollars per share) - -2-2 -3 Total New Factory Shipments 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Census Bureau. -2-3 Page 1 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
Revenues & US Exports 32 Figure 21. S&P REVENUES & US MERCHANDISE EXPORTS 17 3 27 2 S&P Revenues (dollars per share, nsa) US Merchandise Exports (billion dollars, saar) 13 22 11 2 9 17 7 12 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Census Bureau. 3 Figure 22. S&P REVENUES & US MERCHANDISE EXPORTS 3 2 2 1 1-1 -1-2 -3 S&P Revenues (using dollars per share) US Merchandise Exports 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Census Bureau. -2-3 Page 11 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
2 1 Figure 23. Revenues & US PMIs S&P REVENUES & US PURCHASING MANAGERS SURVEY 6 6 - Nov 4-1 - -2-2 S&P Revenues (using dollars per share, yearly percent change) US Purchasing Managers Survey: Manufacturing PMI 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Institute Supply Management. 4 3 3 2 Figure 24. S&P REVENUES & US PURCHASING MANAGERS SURVEY 7 6 1 6 Nov - 4-1 - S&P Revenues (using dollars per share, yearly percent change) 4 3-2 -2 US Purchasing Managers Survey: Nonmanufacturing PMI 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Institute Supply Management. 3 2 Page 12 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
2 Figure 2. Revenues & Super-PMIs S&P REVENUES & US PURCHASING MANAGERS SURVEY 7 6 1 6 - Nov 4-1 - S&P Revenues (using dollars per share, yearly percent change) 4 3-2 -2 Average Purchasing Managers Survey: Manufacturing & Nonmanufacturing PMI 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: Standard & Poor s Corporation and Institute Supply Management. 3 2 2 Figure 26. S&P REVENUES & J.P. MORGAN GLOBAL PMI 7 6 1 6 - -1 - -2-2 S&P Revenues (using dollars per share, yearly percent change) (-3.2) J.P. Morgan Global PMI Composite Output (sa) (3.7) 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Nov 4 4 3 3 2 * Average Purchasing Managers Survey Manufacturing & Nonmanufacturing. An index above indicates an increase in activity. An index below indicates a decrease in activity. Source: Standard & Poor s Corporation and Institute Supply Management. Page 13 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
7 6 4 3 2 Figure 27. S&P REVENUES & INDUSTRIAL COMMODITY PRICES S&P Revenues (using dollars per share) CRB Raw Industrials Spot Price Index* Revenues, CRB, & TWD 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 12/11 3 29 28 27 26 2 24 23 22 21 2 19 18 17 16 14 13 * Includes copper scrap, lead scrap, steel scrap, tin, zinc, burlap, cotton, print cloth, wool tops, hides, rosin, rubber, and tallow. Source: Standard & Poor s Corporation and Commodity Research Bureau. -16-14 -12-1 -8-6 -4-2 2 4 6 8 1 12 14 16 18 2 Figure 28. S&P REVENUES & US TRADE-WEIGHTED DOLLAR JP Morgan Nominal Broad Effective Exchange Rate (inverted scale) (1.) S&P Revenues (using dollars per share) (-3.2) 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 12/11 2 1 - -1 - -2-2 FN1 *Argentina, Australia, Brazil, Bulgaria, Canada, Chile, China, Colombia, Croatia, Czech Republic, Denmark, Ecuador, Egypt, France, Germany, Hong Kong, Hungary, Japan, India, Indonesia, Israel, Italy, Korea, Kuwait, Malaysia, Mexico, Morocco, New Zealand, Nigeria, Norway, Pakistan, Panama, Peru, Philippines, Poland, Romania, Russia Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Kingdom, Ukraine, Uruguay, Venezuela, Vietnam, and United States. Source: JP Morgan and Standard & Poor s Corporation. Page 14 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
Revenues & US GDP 19. 17.. Figure 29. S&P TOTAL REVENUES & US BUSINESS SALES (trillion dollars, saar, ratio scale) 19. 17.. 13. 13. 11. 11. 9. 9. 7. 7... Business Sales* S&P Revenues** 3. 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 3. * Manufacturing and trade sales. ** Revenues are derived by multiplying S&P revenues per share by the S&P divisor for each quarter. Source: US Department of Commerce, Bureau of the Census and Standard & Poor s Corporation. 21 18 Figure 3. S&P TOTAL REVENUES & US NOMINAL GDP (trillion dollars, saar, ratio scale) 21 18 12 12 9 9 6 6 Nominal GDP S&P Total Revenues* 3 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 3 * Revenues are derived by multiplying S&P revenues per share by the S&P divisor for each quarter. Source: US Department of Commerce, Bureau of Economic Analysis, and Standard & Poors Corporation. Page / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
2 Figure 31. Revenues & US Tax Receipts S&P REVENUES & US FEDERAL TAX RECEIPTS 2 1 1 Nov - - -1 - -2-2 Federal Tax Receipts (using 12-month sum) S&P Revenues (using dollars per share) 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: US Department of Commerce, Bureau of the Census, Standard & Poor s Corporation and Treasury Department. -1 - -2-2 3 2 Figure 32. S&P REVENUES & US FEDERAL TAX RECEIPTS 3 2 2 2 1 Nov 1 - -1 - -2-2 Federal Receipts: Individual Income Taxes (12-month sum) S&P Revenues (using dollars per share) 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 Source: US Department of Commerce, Bureau of the Census, Standard & Poor s Corporation and Treasury Department. - -1 - -2-2 Page 16 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
33 3 28 2 23 2 Figure 33. S&P REVENUES & FORWARD EARNINGS S&P Revenues (dollars per share, nsa) S&P Forward Earnings* Revenues & Forward Earnings 12/1 14 13 12 11 1 9 8 7 18 6 4 13 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 3 * Time-weighted average of current and next years consensus estimates. Source: Thomson Reuters I/B/E/S and Standard & Poor s Corporation. 4 Figure 34. S&P REVENUES & FORWARD EARNINGS 2 2 1 12/1-2 S&P Revenues (using dollars per share) -1-4 S&P Forward Earnings* 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17-2 * Time-weighted average of current and next years consensus estimates. Source: Thomson Reuters I/B/E/S and Standard & Poor s Corporation. Page 17 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
Revenues: Industrial Composite 42 Figure 3. S&P & S&P INDUSTRIAL COMPOSITE SALES PER SHARE 42 37 S&P (283.7) S&P Industrial Composite* (384.) 37 32 32 27 27 22 22 17 17 12 9 96 97 98 99 1 2 3 4 6 7 8 9 1 11 12 13 14 16 17 12 * S&P Industrial Composite excludes the S&P Transportation Composite and the S&P Financials and Utilities sectors. Source: Standard & Poor s Corporation and Thomson Reuters I/B/E/S. Page 18 / December 14, 2 / Market Briefing: S&P Revenues & the Economy www.
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