Earnings Season Is Here l LPL Market Signals Podcast

January 21, 2020

Earnings season has started, although we expect only a marginal increase over last year’s fourth quarter. For us, the focus is on what we can expect in 2020. We also look at historical S&P 500 Index performance in presidential election years.

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Q4 earnings season is upon us, and the LPL strategists discuss why it’s all about 2020. Earnings always matter, but as fourth-quarter earnings are expected to be slightly lower, we are most interested in what corporate America has to say about future earnings. Earnings are expected to grow 5-7% this year, which is right in line with the long-term average. Given 2019 earnings most likely will be flat, we’re expecting to see improvement in 2020.

ECONOMIC ROUND-UP

We had some big positives on the economic front last week. For starters, the United States and China finally agreed on phase one of a trade agreement. As the LPL strategists discuss, there are many opinions about whom the deal will benefit, but the bottom line is this deal removes one major stance of uncertainty. The fact things have calmed down between the two international powers could be what’s needed to allow business investment to pick up.

Additionally, retail sales in December came in quite strong, further suggesting the consumer remains the shining star of the U.S. economy.

TALKING ELECTION YEARS

There are increasing concerns about what the upcoming U.S. election could mean for stocks. Here’s the good news: Since 1940, the S&P 500 Index hasn’t been lower during an election year when the incumbent president was up for reelection. In the years the incumbent president was a lame duck, however, we have seen some large declines. For instance, the 2000 and 2008 election years both had lame duck presidents, and stocks were lower those years.

Tune In Now

Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunes, Google Play, or Spotify.

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IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC.

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