Bloomberg Intelligence's 'Equity Market Minute' 1/20/2023

Gina Martin Adams discusses the potential cyclical inflection point in the S&P 500 earnings stream, influenced by inflation indicators. She highlights the relationship between operating margins and the Producer Price Index (PPI), noting recent trends where producer prices rose slower than consumer prices. The market outlook remains uncertain, with leading industries like semiconductors, transportation, and home builders showing varied performance. Home builders have broken out of a long-term downtrend, while semiconductors and transportation need further confirmation of improvement.

What is the potential impact of a cyclical inflection point on the S&P 500 earnings stream?

• It could lead to a decline in earnings.

• It will cause earnings to become unpredictable.

• It might result in improved earnings.

• It will have no effect on earnings.

How do operating margins typically behave in relation to the Producer Price Index (PPI)?

• They tend to decline after PPI peaks.

• They remain constant regardless of PPI changes.

• They are inversely related to PPI.

• They usually improve after PPI peaks.

What recent change in price trends is expected to stabilize margins?

• Producer prices falling below consumer prices.

• Both producer and consumer prices rising at the same rate.

• Consumer prices rising faster than producer prices.

• Producer prices rising faster than consumer prices.

Which industry has shown a decisive breakout from a long-term downtrend?

• Semiconductors

• Transportation

• Technology

• Home builders

What is needed for a more optimistic market outlook according to the final section?

• A decline in consumer prices.

• A rise in producer prices.

• Confirmation from semiconductors and transportation industries.

• A decrease in operating margins.