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The Bulls are in Charge as Earnings Season Begins

This is Tracey Ryniec, Editor of the Value Investor and Insider Trader newsletters, filling in for Kevin while he's out of the office Monday and Tuesday of this week.

Woe to those who bet against this stock market.

Wall Street heads into earnings season this week full of optimism after the US and China agreed to a truce in the trade war.

In what is being billed as "phase 1" of a larger deal, the Chinese have agreed to buy between $40 and $50 billion in agriculture products, most likely soybeans and pork, and in exchange the US will not be raising the tariffs on apparel, shoes and other goods by another 5% this week.

While this deal hasn't yet formally been put into writing, it's clear that some of the animosity of the last few months has lifted and both sides were legitimately negotiating at the table last week.

And that's all Wall Street needs is a sign that the trade talks are headed in the right direction.

Because now, traders can focus on the real news this week, which is the official start of earnings season. JPMorgan Chase is kicking things off, along with a handful of other large banks, big industrials like Honeywell, transports such as Kansas City Southern and United Airlines, as well as consumer giants like Coke.

Investors will get a real good look at what is going on out there in the economy.

But we already know that these reports are likely to be better-than-expected.

How do we know that?

Fastenal reported last week. It's the bellwether for manufacturing and construction. And while it continues to see general slowing among all of its segments, as it also saw the prior quarter, that slowing hasn't gotten worse. Customers remain cautious, but they're not panicked.

All the doom and gloom talk of an imminent recession was just that, talk.

Fastenal shares soared 17% on its earnings report. Look for other earnings surprises, on the bullish side, from other companies this week.


Tracey Ryniec

Stock Strategist at Zacks Investment Research , Zacks Investment Research


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