Capital Markets: Observations & Insights
Fundamentals
Leading Indicators Suggest Continued Expansion
• The LEI historically leads S&P 500 EPS by 6-18 months
• Typically the Leading Economic Index (LEI) expands by a double-digit percentage peak-to-peak • Using the average of the past three periods implies a peak in late 2019
• The record LEI reading in 1Q18 suggests EPS have room to run
Recession LEI
Peak
110
120
$170
Only 6%
12%
100
$150
100
36%
18 Month Lead
80
S&P 500 EPS
$130
18%
90
60
$110
40
$90
80
20
$70
Leading Economic Index
0
70
$50
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
2018
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source: FactSet, Conference Board, Evercore ISI. EPS estimates based on next 12-months consensus.
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