Bloomberg Intelligence's 'Equity Market Minute' 8/15/2018

The video discusses the current state of earnings growth for the S&P 500, noting that while growth is peaking, it is not yet contracting, which is crucial for stock outlooks. It highlights the importance of monitoring cyclical versus defensive sector earnings as a contraction indicator. Additionally, the video examines capital spending, emphasizing it as a lagging indicator that could impact margins if not aligned with sales growth. The overall message is to watch these indicators closely to understand their implications on the equity market.

What is a common outcome when earnings growth begins to decelerate?

• Price growth decelerates

• Stock prices become volatile

• Earnings growth contracts

• Price growth accelerates

Which indicator is used to predict potential contractions in earnings growth?

• Sales growth patterns

• Cyclical sector earnings growth

• Defensive sector earnings growth

• Capital spending trends

Why is capital spending considered a lagging indicator?

• It is unaffected by tax reforms

• It predicts future sales growth

• It occurs after sales growth has already increased

• It leads to immediate margin improvements

What could be a potential risk if capital spending continues at a robust pace?

• Erosion of profit margins

• Improved earnings growth

• Stabilization of market volatility

• Increased stock prices

What should accompany capital spending to ensure it does not negatively impact margins?

• Decreased tax rates

• Robust sales growth

• Increased defensive sector earnings

• Higher cyclical sector earnings