US: Rebound in equity markets - NBF

According to analysts at National Bank Financial, US equity markets are rebounding on the back of better-than-expected economic data, after anticipating a major economic slowdown just a few weeks ago.

Key Quotes

“This is not to say GDP growth won’t slow in 2019 – we expect 1.9% Q4/Q4, down from 3.1% in 2018 – but we don’t see a contraction. With earnings showing signs of stabilizing, companies are less likely to cut back on investment and headcounts. That is key to keeping the economic expansion going.”

“The bottom-up consensus of equity analysts expects S&P 500 earnings per share to grow 5.7% in 2019. This estimate is in line with that for sales growth, implying no profit-margin expansion in 2019 (as we have been forecasting for the past few months). We find these expectations to be reasonable, especially in a time of USD depreciation.”