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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