US Earnings Review

TL;DR

U.S. earnings season is showing positive surprises in sales and earnings, suggesting that margins are holding up well. Despite some downward pressure on earnings forecasts, the situation is not as severe as the earnings recession of 2015-2016. Meanwhile, the eurozone is experiencing more significant growth slowdowns, making the outlook for U.S. equities relatively favorable compared to international equities.

Transcript

so we're in the u.s. earnings season as I speak we're about 60% of the way through the S&P 500 reporting what does the scorecard look like so far well you know thus far it doesn't look too bad we had a small upward surprise on sales top-line growth that's about 1/2 to 1% upward surprise and we've got about a three and a half to four percent surpris... Read More

Key Insights

• 😮 Sales and earnings in the U.S. earnings season have pleasantly surprised, contributing to a positive overall scorecard.
• 🥹 Margins in US corporates are holding up relatively well, despite coming off multi-year highs.
• 🙈 Earnings forecasts have seen some deterioration, although not to the extent of the previous earnings recession.
• 😀 The US earnings outlook faces some downside risks, but other regions, such as the eurozone, are experiencing more significant challenges.
• 🌍 Equity strategists predicted better performance from international equities, but the actual outcome has not yet matched expectations.
• 🎭 Emerging markets have performed relatively well due to the Federal Reserve's change in guidance, but it does not guarantee a shift from growth stocks in the US to value-oriented stocks elsewhere.
• 🏤 Contrary to expectations, European equities may not significantly outperform US equities based on the current validation from the US earnings season.

Questions & Answers

Q: How are sales and earnings performing in the U.S. earnings season?

Sales and earnings have shown upward surprises of 1/2 to 1% and three and a half to four percent, respectively, indicating a relatively positive result.

Q: Are margins holding up well in US corporates?

Yes, despite coming off multi-year highs, margins are holding up reasonably well in US corporates.

Q: How do the current earnings forecasts compare to the previous earnings recession in the US?

While there has been some deterioration in earnings forecasts, it is not as severe as the earnings recession experienced in 2015-2016.

Q: How does the earnings outlook for the US compare to other regions?

The US earnings outlook has some downside risks, but other regions, particularly the eurozone, are experiencing more significant growth slowdowns, making the US comparatively more favorable.

Summary & Key Takeaways

• Sales and earnings in the U.S. earnings season have shown upward surprises of 1/2 to 1% and three and a half to four percent, respectively.

• Margins in US corporates are holding up well, even though they are coming off multi-year highs.

• Earnings forecasts have seen some deterioration, but it is not as severe as the previous earnings recession.

• The eurozone is experiencing more dramatic growth slowdowns, making the outlook for U.S. equities relatively positive.