Notes from the Research Desk

Last week was a busy week of trading that saw the S&P 500 fall by 1.3%. The market focus was squarely on corporate quarterly results and central bankmeetings, which kept investors cautiously positioned. The FOMC meeting provided very little incremental news, while the Bank of Japan’s lack of action drove global equities to a late week sell-off. US economic growth slowed in Q3/Q4 2015 but remains solid/resilient. Q1 2015 thus far appears solid. Commodities were led by gains in Oil and Gold.

The next several weeks will see the remaining companies report earnings for 1Q 2016. So far company’s are reporting a solid beat. Earnings are expected to decline -5.7% (-1.7% ex-Energy ) over last years first quarter with 75% beating and a +5% surprise factor. This week 124 S&P 500 companies will be reporting Q1 2016 earnings.

Our 2016 year-end price target has been revised down to 2,060 (+1% from 2015 year end) from 2,175 for the S&P 500. 2016 Earnings now $121 (+3.5%) having come down from $127.50 to start the year. PE Multiple of 17.0X still intact despite increasing downside risks.

The NFL Draft has become a war of attrition, spanning 4 grueling days. LA's new/old team had an eventful first day, selecting Cal QB Jared Goff with the number 1 overall pick. Of course, they had to give up a ton of picks to move up to get him, so here's hoping Goff has a stellar career as a Ram. In other draft news, the award for "Best Name Matched to his Team" goes to new NY Giant CB Eli Apple. Maybe Eli & Eli can create some Big Apple magic.