November 2018 – 3 in 3
This month, Jason Weaver discusses markets and elections, 2018 corporate earnings, oil and inflation. If you would like to subscribe to our monthly 3 in 3 videos, visit our YouTube channel below. At Weaver Consulting Group we’ve come to know through our clients that they like to stay informed about the economy and markets, which is why we’ve come up with “3 in 3.”
“3 in 3” is a monthly video series centered around three current market themes for the month with their accompanying data points. At Weaver Consulting Group it’s our goal to provide the maximum amount of value to you and your family. We hope this helps you feel more informed, which allows you to be more confident, so that you may find yourself inspired and worry free in retirement!
Markets and Elections
History shows that preceding a midterm election, and before a vote, we typically experience a correction. But after the outcome (regardless of who wins), the stock market averages a 17% return in the following 12 months. The last two midterm elections have had 31% and 9% returns after the vote. And a correction of 16% and 7% leading into the vote.
Q3 2018 Earnings
Third quarter earnings were good. We had 90% of those companies report 78% beat earnings and the average revenue growth has been 8.5%. As we look in to the fourth quarter, we’ve had 70 companies give projections or guidance. 46% have issues negative guidance going into the fourth quarter. 24% have issues positive guidance. Therefore, it’s going to be a mixed bag going into the fourth quarter of 2018. As you can see in the earning chart, we saw in the third quarter that energy, financials were below their estimations in the third quarter.
Oil and Inflation
There’s a lot of correlation between oil and inflation. Typically, an input cost like oil can directly affect the bottom line of a company. The correlation is that as oil tends to come down, inflation might follow. We haven’t seen that yet, but we are starting to see the consumer price index (or inflation gauge) show that potentially in the fourth quarter of this year, and the first quarter of next year, we might start getting lower readings in inflation.
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November 2018 – 3 in 3