Capital Markets: Winter 2019

​ Fundamentals

Leading Indicators Suggest Continued Expansion

• The LEI historically leads S&P 500 EPS by 6-18 months • The increase in the LEI suggests EPS should continue growing

• Typically, changes in the Leading Economic Index (LEI) have preceded changes in economic growth • The rate of change of the LEI implies solid, albeit slowing, economic growth

15%

8%

$190

10%

6%

110

$170

5%

4%

Real GDP Growth YoY

100

$150

0%

2%

S&P 500 EPS

18 Month Lead

$130

-5%

0%

90

$110

-10%

-2%

$90

-15%

-4%

80

Leading Economic Index

-20%

-6%

$70

Leading Economic Index YoY

-25%

-8%

70

$50

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Source: FactSet, Conference Board. EPS estimates based on next 12-months consensus.

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