Through 2020 and into 2021, it’s all about earnings per share growth for the Standard & Poor’s 500 index and potential U.S. equity returns. As noted last week, I see 10% plus EPS growth and that should translate into another double-digit equity return next year as investors begin to discount EPS of 2021 some12 months from now.

Of course, it’s a Wall Street axiom that every year profits matter and 2020 is no different. Over the long term it’s true. However, in the short term sometimes EPS can matter less than price/earnings ratios (P/E)—and vice versa—for example. Let’s look at the big picture over the past few years. Remember, that the SPX EPS shot up over 20% in 2018 to $162 from $131, thanks mainly to a one-time Federal tax cut. Yet the result was a market that was down 6% in price. In 2019, earnings are essentially flat at $163 estimated, with a few days left, from in 2018, yet the market has soared about 30%.

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Clearly there were other things hampering investor sentiment in 2018, and those things generally, as I have outlined from time to time, were the Federal Reserve, which was tightening when it shouldn’t have; a global economic growth slowdown, and trade war between the U.S. and China, among other countries. All this appears to be behind us fo...

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