BUD: Where are we? May 2018, page-226

@aks4058

btw sorry i realised i neglected one thing you asked amount - view on small cap outlook

v bullish

non gaap earnings rate of change is what drive indices.

ie sp500 earnings grew 20% yoy march qtr 17 to march qtr 18 - that what drove the massive move up - from 13% the year prior

https://seekingalpha.com/article/4160349-full-year-2018-s-and-p-500-eps-revenue-estimates-changed

that rate of change will now slow - because the was the start of comping the US tax change + some of their sectors have reached cyclical peaks - classic late cycle. so comps start to look less attractive

its still growing but at a slower pace - that will see some money move out of indices because without high rate of change their returns + rising us interest rates they will face downward pressure on p/es, increased debt costs and less super attractive comps - so returns will be increasingly sloppy and volatile

money will move into small cap and nasdaq + commodities - so small cap tech has good prospect for another bull run before the entire cycle tops out

the reason for money moves into those 3 sectors is because tech and small caps are secularly unconstrained in growth - ie its not strongly correlated to gdp or impacted by interest rates - and in the case of small caps they have ability to drive big earnings shifts quarter to quarter purely by effort

the combo of being a small cap in tech is as a result the most attractive - if you are getting earnings uplift

ie if Bud goes from annualised $2mpa in march qtr to ~$3m annualised revenue in June qtr (ie $750k)- thats a 50% rise in revenue - and almost enough to bring it to positive eps .

thats the kind of catapult switch the market starts looking for when big caps start going from 20% down to 15% eps growth

commodities rise simply because they are at very considerable discount to historic values - albeit many have already run a good way. thats classic late stage of the economic cycle behaviour

the overall market though should be increaisngly volatile but fundamentally positive imo - because earnings growth for big caps is still going to be double digit

thats what you need for risk sentiment to remain intact - the overall equity tend generally needs to stay up for small caps to go into overdrive

demands that global gdp growth remains broadly constructive - and US specifically of course

all imo