Posted by Earnings Expectations are too high!
Average margin contraction across 9 SPY sectors is negative 1.5 points. That is 2X the 0.7 point expected decline for the S&P 500 as a whole.
Only Energy +Industrials are expected to show YoY improvement.
H/t @DataTrekMB pic.twitter.com/rKFRQ3XCf9
— Samantha LaDuc (@SamanthaLaDuc) July 26, 2022
BofA: Walmart pre-announcement suggests gross margin headwinds for Amazon$WMT $AMZN pic.twitter.com/IBnS1IseEY
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) July 26, 2022
Ex-energy, S&P 500 EPS growth is already in a minor profits recession, akin to the 2011 or 2015 experience. pic.twitter.com/M1HKi7jfwX
— Gina Martin Adams (@GinaMartinAdams) July 26, 2022
$WMT slashes forward guidance – rampant inflation causing shoppers to spend more on “needs” like food & less on “wants“ like clothing & electronics. EPS downgraded to -12% from +1% for FY23!
Most EPS estimates way too optimisitic –
After the "Surge Comes the Purge" pic.twitter.com/EyMUZyVp8b— Douglas Orr, CFA (@EquitOrr) July 26, 2022
106 S&P 500 companies comprising 27% of index earnings have reported.
2Q EPS is tracking a <1% beat at $55.78 vs. consensus $55.35,
but 2H EPS has been revised down 1% since July 1 pic.twitter.com/lqm0VcsMvz
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) July 25, 2022
Ex-Energy, SPX EPS is expected to fall 5.1% yoy in Q2 pic.twitter.com/UKsSvu3zVI
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) July 25, 2022
Corporate sentiment plummeted… pic.twitter.com/4NphzcnDZj
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) July 25, 2022
a first, early, look at 2Q reporting season. so far i find it subpar…but on par with what i was expecting this year. negative revisions have broadened out and recent data (PMIs) suggest more paper cuts to come. https://t.co/zyB0YAU5AA
— MrBlonde (@MrBlonde_macro) July 25, 2022
Goldman:
Our top-down S&P 500 earnings model shows that, holding all else equal, a 10% appreciation of the trade-weighted dollar would reduce index-level earnings by 2-3%. pic.twitter.com/wYmF4OWOXo
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) July 25, 2022
So far, 33 S&P 600 companies have reported. Earnings forecasts are 1.5% higher vs. at the start of reporting season
Analysts are forecasting small cap earnings growth of +9% YoY and on sales growth of +14% YoY. pic.twitter.com/r0Vh5jWL9m
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) July 25, 2022
SP500 down to 16X Forward earnings is cheaper but not cheap
– yes it's now below the "Taper Ave" of 16.5X
– but EPS downgrades are very likely sizable for 3-6mths
– previous downgrade periods saw 15X/13X in '15/'12 respectively
=> EPS downgrades & deratings likely = headwinds pic.twitter.com/bywvdEF47u— Douglas Orr, CFA (@EquitOrr) July 25, 2022