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Strong Earnings Reports & Rising Rates: Then What?

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It looks as though corporate earnings growth is recovering sooner than anticipated. But when will the overall economy recover from Covid-19? Maybe our Chief Equity Strategist and Economist, John Blank, can help answer that.

1. John, let’s start with the earnings picture. Analysts had anticipated earnings growth would resume in Q1-2021, after four straight quarters of pandemic-driven declines across the entirely of 2020. So, what caused its early arrival?

2. Positive earnings surprises keep growing week-after-week this season, which in turn pushes the growth rate higher week-after-week. This growth in S&P 500 earnings marks the first time the index has reported year-over-year earnings growth since Q4 2019. Is it any surprise to you that these earnings surprises are being reported in multiple sectors?

3. U.S. corporate results look even more rosy given the dismal picture in Europe where fourth-quarter earnings are seen dropping about 24%. What does the trend look like for the first half of this year?

4. Widening out now to the bigger picture, the damage report on our economy is in. There’s good and bad news. The good news is that we continued the recovery process in Q4 that we saw in Q3 of 2020, in terms of U.S. GDP. The bad news is that we’re still in the doldrums. Why is this?

5. Is this worrisome to you?

6. There is a bright side though right?

7. When do you think the U.S. Economy is going to recover, to pre-pandemic levels, from Covid-19?

8. Three oil companies are on your radar. Exxon Mobil (XOM - Free Report) , Royal Dutch Shell (RDS.A - Free Report) and China Petroleum & Chemical (SNP - Free Report) .

Taking a look at earnings and economic macro trends with our Chief Equity Strategist and Economist, John Blank. With John, I’m Terry Ruffolo.

 


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