With just shy of 90% of S&P 500 companies having reported earnings for the 2nd quarter, earnings growth is expected to be greater than 93%. In addition, revenue growth is estimated to be 23.5%. Both readings are well above the levels that were originally expected this reporting season. Last week also marked the second consecutive week both earnings and revenue growth expectations rose for every sector. Quarterly Progression Showing A Weaker 3Q Than 2Q Now While year-over-year earnings gr… View More
Bottlenecks have been larger than anticipated. Inflation is starting to register on the D.C. political radar, but a wait-and-see approach is still favored. U.S. inflation is (still) viewed as transitory. Recent U.S. bond market moves have not scared the Fed. The 10-year Treasury finished last week at 1.22%. As we noted last week, the rise in inflation is pushing down real (inflation-adjusted) spending & GDP growth. U.S. nominal GDP was +13% q/q A.R. in 2Q, but inflation was 6%. Consumer sp… View More
Despite some challenges, 2Q economic growth looks solid. 3Q is more of a question mark. The rise in inflation is pushing down real (inflation-adjusted) spending & GDP growth (the core CPI rose at an 8.1% q/q annualized rate in 2Q). Rents are starting to rise. Supply-chain bottlenecks could last longer than expected, especially given uneven global vaccine distribution & effectiveness. If there is hesitation to re-open schools for the next academic year, labor force participation could re… View More
DoubleLine CEO Jeffrey Gundlach has been touted as the top fixed income manager for more than a decade now. Not all of his calls are 100% correct but he is right more than wrong and when he is wrong, he is not afraid to admit it. Six months ago, Gundlach told CNBC that he thought stocks were very expensive. Today, they are about 15% higher. When asked by CNBC’s Scott Wapner what he thought of equity prices yesterday, he acknowledged they were very expensive. But the “biggest case for stock… View More
On July 9th we suggested that the bull market wasn’t over but that it was due for a breather due to already high expectations for earnings and market performance and the not insignificant chance that the yield on the 10-year Treasury note was telling us something. With the preannouncement ratio below 1, there remains little room for error during the reporting season. Today we present more evidence for this point of view with our regular monitoring of our LES Model. We developed the measure abo… View More