The Power of Corporate Earnings
In This Issue
Stocks stumbled across the globe last week as trade tensions continued to escalate. Despite rebounding somewhat on Friday, the S&P 500 experienced its first weekly loss in a month, and the Dow posted its worst week since March. [1] The S&P 500 dropped 0.89%, the Dow lost 2.03%, and the NASDAQ fell 0.69%. [2] International stocks in the MSCI EAFE gave back 0.98%. [3]
While trade headlines may affect market performance, a closer look at the data shows other, more powerful drivers affecting equity prices. In particular, many investors continue to focus on corporate earnings estimates.[4]

Analyzing Corporate Earnings
Strong corporate earnings have helped maintain a sense of market balance in 2018. As the media focuses on political stories, corporate earnings estimates continue to rise - and have a greater market affect than many investors may recognize. [5]
  • How Corporate Earnings Estimates Work
Many financial services companies hire analysts to predict how much a company's stock will earn per share. The average of all the experts' predictions creates a consensus earnings estimate. This calculation gives a rough view of the company's cash flow - which helps investors value a stock. Generally, when a company beats its earnings estimate, the stock price goes up. If it misses or matches the prediction, the stock may suffer. [6] 
  • Where We Are Now
Tax cuts and increasing demand have helped earnings estimates grow this year. As the estimates have risen, companies with the largest increases are significantly outperforming those with the worst. The latest numbers show earnings per share growing in 2019 and 2020 - and 2018's projections are higher than they were at the end of the 1 st quarter. This data has helped keep markets from overreacting to the geopolitical buzz in the background. [7]  

Looking Forward
While we expect to hear more on a potential trade war, we will continue to focus on key market principals. This week, we will receive several reports, including consumer confidence and durable goods orders. Rather than significantly affecting stocks, these releases may simply underscore what corporate earnings and other data continue to demonstrate: Right now, the economy is healthy. [8] 

Next month, earnings season will begin, and analysts expect S&P 500 companies to show 20% profit growth in the 2 nd quarter. [9] 

Looking ahead, we will continue to analyze how rising tariffs could affect the domestic and global markets. But, as always, economic fundamentals will take the lion's share of our attention.  

If you have questions about earnings, trade, or your future, contact us any time.  

Tuesday: Consumer Confidence
Wednesday: Durable Goods Orders  
Thursday: GDP,Jobless Claims
Friday: Personal Income and Outlays, Consumer Sentiment

Notes: All index returns (except S&P 500) exclude reinvested dividends, and the 5-year and 10-year returns are annualized. The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on and the index returns published elsewhere. International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly .

"Opportunity is missed by most people  
because it is dressed in overalls and looks like work."  

- Thomas Edison

New England Clam Chowder
Serves 6

  • 1 cup water
  • 18 large littleneck clams
  • 3 slices of bacon
  • 1 medium onion
  • 1 tablespoon all-purpose flour
  • ¼ teaspoon ground black pepper
  • 1 pound all-purpose potatoes
  • 2 cups half-and-half
  • 1 cup milk
  • ¾ teaspoon salt or to taste
  1. Boil the water over high heat in 6-quart saucepot. Put in clams and boil again. 
  2. Lower the heat slightly. Cover the pot and let simmer until the clams open, 5-10 minutes.
  3. Put the clams in a bowl as they open. Throw away any clams that don't open. 
  4. Remove the clams from the shells once they're cool to the touch. Chop them up coarsely. Throw away the shells. 
  5. Strain the clam broth through a paper towel-lined sieve into a measuring cup. Add water if necessary to make a total of 2 cups.
  6. Cook bacon over medium heat in the same clean saucepot until lightly browned. Use slotted spoon to move the bacon to paper towels. 
  7. Put the onion in the pot with the drippings. Cook until tender, stirring occasionally, about 5 minutes. 
  8. Mix in flour and pepper until blended. Cook for 1 minute. Stir in clam broth gradually until smooth. Add potatoes and heat until boiling. 
  9. Lower the heat and cover. Simmer until potatoes are tender, about 15 minutes.
  10. Add half-and-half, milk, and chopped clams. Heat but do not boil. Stir in bacon. 
  11. Add salt as needed.
Recipe adapted from Good Housekeeping [10]


2 Words to Get the Ball to Drop in the Hole

How do you make the perfect putt? Here's a clue: 2 words, 3 syllables. 
It's "perfect pace." By saying those 2 words during your putt, you may be able to restore the rhythm to your stroke.

Here's how it works. As you prepare to make your stroke, think of that phrase and a pendulum.  

As you swing the putter back, think "per-fect," 2 syllables. As you swing through, think "pace."

The move will help establish cadence in your putt and enable you to hit the ball solidly and smoothly. It also helps eliminate jerky and abrupt movements in your swing.

Focus more on how you're going to putt rather than making the putt.  

Tip adapted from Golf Digest[12]
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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.  

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Platinum Advisor Strategies, LLC, and not necessarily those of the named representative,  
Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

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