Part 1 Birinyi Associates' Global Outlook for 2009 details forecasts and estimates for US markets and stocks, specifically the S&P 500, its members, and their sectors and groups. Comparing bottoms up estimates to the top-down forecasts issued by market strategists we find that most market commentators are generally uncertain about the year ahead. On the top down side, strategists expect the S&P 500 to gain 20% during the year but EPS for the index are expected to decline 20%. The current bottoms up forecast points towards a similar 20% gain for stocks, but a more modest decline in EPS of 1.7%.
Below we highlight what is probably more important than earnings the number itself: the trend.
S&P 500 EPS for 2008 & 2009:
In the last two weeks negative revisions have pushed 2009 expectations below those of 2008, and the negative momentum which picked up in October-08 seems to continue. 2009 expectations - on a bottoms up basis - have been revised down 25% over the last three months. As long as negative momentum continues for EPS forecasts the market will not be able to sustain gains.
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- Birinyi Associates' market outlook and 2009 strategy.
- Detailed bottoms up impact analysis based on S&P 500 member price targets.
- Bottoms up versus top down earnings estimates for sectors and groups.
- Recommended sector weightings and stock recommendations by major brokerages (one sector stands out as the most recommended for 2009).
- Group earnings and earnings impact on sectors.
- International markets: the bright spots and what to avoid.