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Ahead of Wall Street

Friday, April 28, 2017

So Q1 GDP results — the first read of three, anyway — was released this morning, and the paltry 0.7% growth in Gross Domestic Product through the first quarter looks disappointing on the face of it. Market futures are positive in the pre-market, but upon this release we could almost feel the dampening effect. That said, Zacks Exec VP Steve Reitmeister called this result, more or less — click here for details — but we’re not going to say “we told you so.”

Instead, we’d like investors to consider that Q1 GDP results are usually affected by inclimate weather and its results are usually well below the overall full-year average. In fact, projections toward Q2 GDP — and remember Q1 results will be subject to two revisions — is up to 3%. Now that’s more like it. Sure, this may tend to quiet those Trump-Rally bulls looking for 4% growth this year, but 3% is nothing to sneeze at. It’s just going to take a little longer to get there.

This latest read also brought forth a new Employment Cost Index of 0.8% (0.5% was estimated), and a new Pricing Index at +2.4% (2.0% estimated) and Personal Consumption read of 2.3% (core was 2.0%) add to the data. None of this looks shockingly off-base, but neither does it re-direct the narrative toward a stronger domestic economy.

We also have yet to see the results of any new policies from the Trump administration manifesting themselves into the 2017 economy. Probably the biggest reason for this is that nothing related to new economic realities has yet been passed through Congress, now 99 days into President Trump’s tenure. We have seen big gains in the stock market this week on significant enthusiasm regarding corporate tax cuts (in lieu of a tax reform overhaul), but also due to strong Q1 earnings numbers. While Q4 2016 earnings season produced the best results we’d seen in years, Q1 is easily topping those numbers now halfway through reporting.

Q1 Earnings Results

The world’s largest oil & gas corporation, Exxon Mobil XOM, reported Q1 earnings ahead of the bell this Friday, posting a 10-cent beat on the bottom line to 95 cents per share on revenues of $63.287 billion, which fell short of estimates by about a billion dollars in the quarter. This is more than double the 43 cents per share reported in the year-ago quarter, and amounts to the third straight quarterly earnings beat. For more, click here.

Exxon peer Chevron CVX also put out Q1 results this morning, posting a big beat on the bottom line: $1.41 per share versus a Zacks consensus estimate of 85 cents. This is a huge year-over-year turnaround, which brought in -39 cents per share in Q1 2016. Revenues in the quarter of $33.42 billion also topped estimates of $32.01 billion. This is the third quarter in the past four where CVX has posted an earnings beat, which appears to have swung to a four-quarter gain in earnings results.

Mark Vickery
Senior Editor

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Earnings and Economic News

Key Earnings Reports For Apr 28, 2017

Economic Event Reported
(+) Mich Sentiment-Rev. - Apr 28, 2017 --
(+) Chicago PMI - Apr 28, 2017 --
(+) Exports - Apr 28, 2017 --
(+) Imports - Apr 28, 2017 --
(+) Federal Funds Rate - Apr 28, 2017 --
(+) GDP Advance Estimate - Apr 28, 2017 --
(+) Disposable Personal Income - Apr 28, 2017 --
(+) Treasury notes (10 yr) - Apr 28, 2017 --
(+) Treasury bills (3 mth) - Apr 28, 2017 --
(+) Chain Deflator- Advance Estimate - Apr 28, 2017 --