With over 90% of the S&P 500 companies reporting (90 day treadmill), we give the season a B+, and seasonally we are starting a good time of the year.
Capital Market Companies continue to struggle (although somewhat less) with sales, but due to strong cost cutting (increased productivity) most are providing reasonable bottom line (Net Income/EPS) growth. As a side note, looking over the next few quarters most companies will have easier comparisons, as sales and EPS rates, fell off a cliff this time last year, especially consumer related companies.
Historically, please do not put too much weight on this factor because Capital Markets have made a dramatic move since a worst case Armageddon scenario was taken off the table in most investors minds earlier this year, Capital Markets tend to do well in the last two and first months of the year.
Why does this happen?
In our opinion, many investors may be looking to improve performance in their investment portfolios to gain greater returns for year-end materials (i.e. Pamphlets, brochures and flyers). Also, as the end of the year makes it way to investor’s calendars, a happy time greets many with regards to time away and family time, offering many a more positive view towards economic trends. The beginning of the year often marks heavy cash inflows as bonus, year-end shore ups of cash, and delayed investments, make their way into the Capital Markets. While anything can happen, 2008 for example, all other factors being equal (which they never are) history and momentum favor an upward bias in the Capital Markets for the next 90 days or so.
This is of course our opinion and history can always be re-written at any time.
Have a Good Day!
90 Day Treadmill Confession Time Begins-Expected Winners and Losers
90 Day Treadmill-Earnings Season
Alcoa’s, (AA) earnings release Monday April 11th, marks the unofficial start to the 90 day treadmill confession season, better known as earnings season.
Over the next several weeks thousands of public companies will report their results for the last 90 days, with each company’s management team focused on painting as positive of picture as legally possible.
A singe digit number of residents of our favorite domestic index, the S&P 500, report this week, with a much greater group reporting next week and peaking in member reporting the following week.
As we begin the season, here is what investors are expecting according to Thomson Reuters:
The two winning estimated earnings growth sectors:
The two losing estimated sectors are :
We will keep you updated as the estimates become results, and market participants voice their opinions.
Have a Good Day!
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Posted in General Financial Planning, Investing/Financial Planning, Market Comments
Tagged Earnings Season, Earnings Week, US Economy