Earnings scorecard

Out of that 500 companies in the S&P500, 450 have reported earnings. The scored card is: (1) revenue growth 4.9%, earnings growth 14.1%, driven mostly by Healthcare and communication services, and with energy as a big detractor. (2) 76% of the reported companies have surprised to the upside. (3) announced buybacks have exploded to $650Bn, a new record, and almost 3X the amount repurchased on 2020. (4) on the earnings call, the vast majority of that companies have mentioned the word tariffs and are guiding lower for the remainder of the year, and the word recession has appeared multiple times. Estimates for full year earnings growth vary between 7% (GS) which means earnings will fall sharply in the following quarters, as one should expect if we are indeed expecting a recession, and 14% (JPM) where the thesis is tarde negotiations will succeed and companies will be able to muddle through the new scenario, which today, seems difficult to see. Let’s see if the weekend negotiations between China and U.S. bring a light on the path forward.

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