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A Quick Take On Earnings Season

|Includes: SPDR S&P 500 Trust ETF (SPY)

In the past I’ve received compliments for me terse market commentary.  I’m not entirely certain, but there may have been a hint of sarcasm buried in there.  Keeping that in mind here’s today’s update. 

The hits keep rolling in, just not enough of them for the Los Angeles Angels last night.  With a touch over 100 of the 500 companies in the S&P index having reported the results look pretty darn good.  Over 80% are beating on earnings estimates.  Importantly over 60% are beating in top line revenue.   Coming into earnings season market participants were looking for two things.

1. Increased revenues.  Prior earnings beats had been achieved through cost cutting and delaying deployment of capital.   We all understand you can only cut costs and headcount so far.  

2 Guidance.  We nee to hear companies give some clarity on future estimates and customer end demand. 

It is early, but so far, we’re hitting the tri-fecta. Earnings are beating handily. While Top line growth has been tepid, it is still a vast improvement. We’re hearing company  CEO’s feeling confident enough about their respective business to raise future earnings estimates while noting a sense of stability returning to end user demand.   

Again, we’ve got a ways to go in this current earnings season before we’ll have enough company data to signal the worst is behind.  But, if the current trend continues, analysts will be breaking out their erasers yet again and raising earnings estimates and targets. 

Until next time