USA CORPORATE PROFITS AND S&P 500 INDEX Quarterly Growth Outlook
The proprietary Corporate Profits Growth Leading
Indicator (CPGLI) provides a quarterly outlook for the USA NIPA Corporate Profits
Growth in quarterly publication: "CPGLI Outlook".
See short presentation
here.
The National Income and Product
Account (NIPA) Corporate Profits are closely aligned with the aggregate
earnings of the S&P 500 index companies (see a comparison
here).
The historical correlation is in excess of 96% hence our NIPA Corporate
Profits Outlook can be directly applied to forecast major turning points in
the S&P 500 earnings.
We prefer to use the NIPA Corporate Profits instead of
the S&P 500 earnings time series on our graphs
because the data is published free by the U.S. Government's Bureau of
Economic Analysis National Economic Accounts at www.bea.gov
Both, NIPA profits and S&P 500 earnings, strongly
correlate at the major macro turning points to the S&P 500 USA stock market index and other broad U.S. market
indices including Dow Jones, Russell 3000, Wilshire 5000, MSCI USA Index and
NYSE Composite.
Global Applications
The CPGLI Outlook is also applicable to some degree, at the
extreme
macro turning points, to global indices that tend to be then synchronized with the USA such as
S&P Global 100 and MSCI All Countries World Index. Country indices such as
UK, Germany, France, China and Australia are also included.
Links to our quarterly CPGLI Outlooks and Special
Situation Notes samples are on the left.
The 2007-2009 Global Financial Crisis was a true
test of the CPGLI outlook performance
› In
November 2007,
CPGLI indicator issued strong SELL SIGNAL at the market TOP.
› In
March 2009,
CPGLI indicator correctly picked the BOTTOM of the market issuing strong BUY
signal based on "Up strong" Outlook for V-shape recovery in corporate
profits.
› In
May 2009 it
correctly signaled beginning of the V-shape economic recovery.
› Then, for the next 4+ years in quarterly outlooks,
the CPGLI indicator correctly predicted strongly growing profits and rising
with it broad stock market.
› The indicator, however, did not predict the Lehman
Brothers bank collapse in September 2008.
› The Special Situation Notes in
April and
May 2009 correctly signaled a sharp turnaround in the financial stocks.
› In
November 2011
CPGLI Outlook predicted positive for stocks stabilization of the Eurozone.
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