Fritz Meyer Economic Update, February 2020

Stocks have been hitting new highs.

January's purchasing managers index is in line with +2.4% GDP growth -- higher than the latest consensus forecast of +1.8%.
 
ADP's +291,000 net new jobs report for January was gangbusters.
 
At 20X trailing earnings, the S&P 500 fairly valued but not over-valued.
 
At 18X 2020 earnings estimates, the S&P 500 could be expected to make continued upward progress, assuming the economic and earnings expansion continues in line with the current consensus forecast.
 
Because inflation and bond yields have a direct bearing on stock valuations, in an uncharted world of negative interest rates abroad and record low bond yields at home, a higher P/E ratio is sustainable and has potential for expanding.
 
In this month's session, we'll discuss the latest earnings forecasts, P/E ratios, record-low bond yields and global demographics driving global and domestic trends.

Did TCJA stimulate growth? Two full years of data since it was enactments shows the results.


Fritz's monthly updates averaged a 4.9-star rating for the past year, and past performance is an indicator of future results: data-driven strategic long-term analysis for professional investors.

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Before Fritz began advising advisors on A4A in March 2011, he was a mutual fund portfolio manager for many years at one of the world's largest investment companies and then served as its senior investment strategist, spokesman in crises, and top educator of financial intermediaries.