U.S. Equities: Stage Is Set For A Cyclical Correction

Summary

  • US equities are most likely in very late stage of a bull market.
  • Europe and some Asian markets probably peaked during the past few months.
  • Technical analysis suggests that US equities are near the end of a cyclical trend.
  • The bearish worldwide macro-technical picture could signal a peak for US equities within the next few months.

A Bull Market For The History Books

US equities performed a record bull run from the end of the great recession up until now. The broad-based S&P 500 index gained almost 340%. It is the longest bull run in US history. It did not unfold as a straight line and showed some twists and turns. The S&P 500 corrected on six occasions by a low double-digit figure since 2010. The subsequent rallies erased all corrections leading to today’s levels.

Equities boom extended by recent U.S. tax cuts

The current growth cycle in equities has been “elongated” by the U.S. tax cuts that went into effect earlier this year, said Robert P. Browne, chief investment officer of Northern Trust Corp., Chicago.

“You can’t ignore … whether there’ll be a recession in the next five years,” said Mr. Browne, who co-authored a five-year capital markets analysis the bank released Sept. 3, which is available on Northern Trust’s website.

Equities Analysts Issue Forecasts for Kohl’s Co.’s Q1 2020 Earnings (NYSE:KSS)

Kohl’s Co. (NYSE:KSS) – Jefferies Financial Group decreased their Q1 2020 earnings estimates for shares of Kohl’s in a report issued on Tuesday, August 21st, according to Zacks Investment Research. Jefferies Financial Group analyst R. Konik now expects that the company will post earnings per share of $0.83 for the quarter, down from their previous estimate of $0.88. Jefferies Financial Group also issued estimates for Kohl’s’ Q3 2020 earnings at $1.32 EPS and Q4 2020 earnings at $2.86 EPS.

Imperial Capital Equities Analysts Reduce Earnings Estimates for Netflix, Inc. (NFLX)

Netflix, Inc. (NASDAQ:NFLX) – Imperial Capital reduced their FY2018 earnings per share estimates for Netflix in a research note issued on Thursday, August 23rd, Zacks Investment Research reports. Imperial Capital analyst D. Miller now expects that the Internet television network will post earnings of $2.68 per share for the year, down from their prior forecast of $2.71. Imperial Capital currently has a “Outperform” rating and a $494.00 price target on the stock. Imperial Capital also issued estimates for Netflix’s Q4 2018 earnings at $0.48 EPS, Q4 2019 earnings at $1.13 EPS and FY2019 earnings at $4.60 EPS.

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