Prepare For Earnings Season

TL;DR

Corporate earnings in the upcoming quarter expected to decline, impacted by various factors including trade war and sector-specific challenges.

Transcript

the first culture reporting season for 2019 is imminent in the United States and this particular quarter there are a great many things working against us culprits such that the reporting season will take on extra significance for example one of the things that has helped in previous quarters has been the tax credit as announced by President Trump a... Read More

Key Insights

• 🌓 Corporate earnings for the upcoming quarter are expected to decline by around 3.5% year-on-year.
• 😀 Sectors like basic materials, consumer discretionary, auto, and technology are forecasted to face significant challenges.
• ✋ Margin deterioration, higher labor costs, and supply chain disruptions from the trade war are putting pressure on companies.
• 😥 Economic factors like disappointing non-farm payrolls and the US-China trade war are impacting the corporate outlook.
• 😀 Market performance has been strong so far in 2019, yet companies face an uphill battle in the upcoming reporting season.
• 🏣 Management guidance and outlook will be crucial in determining market direction post-reporting season.
• 🚗 The auto sector and technology industry, despite recent warnings from companies like Apple, are areas of concern.

Questions & Answers

Q: What factors are contributing to the projected decline in corporate earnings for the upcoming quarter?

The absence of previous tax credits, challenging comparatives, sector-specific struggles in basic materials, consumer discretionary, auto, and technology, along with margin deterioration from higher labor costs and supply chain disruptions due to the trade war.

Q: How have market performances and economic indicators influenced the outlook for companies in the upcoming reporting season?

Strong market performance to date, disappointing economic indicators like non-farm payrolls, ongoing US-China trade tensions, and mixed sector-specific data like positive manufacturing activity and construction spending versus disappointing retail sales have added complexity.

Summary & Key Takeaways

• The upcoming corporate reporting season in the US faces challenges due to the absence of previous tax credits and favorable comparatives, leading to a projected 3.5% decline in earnings.

• Sectors like basic materials, consumer discretionary, auto, and technology are expected to struggle, with margin deterioration adding to the pressure.

• Economic factors like disappointing non-farm payrolls, ongoing US-China trade tensions, and market performance further complicate the outlook for companies.