The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Little concerned
Despite the breakdown in the US/Iran ceasefire and negotiations this weekend, markets didn’t discount a resolution much. Asian markets climbed small, Europe fell more than a percent, our premarket futures implied about 60 bips of downside. Crude rallied about $5, with lesser gains across the curve. The Treasury yield curve barely changed. The S&P opened down only 10 points before weakening as Europe closed. The S&P bounced once it was on its own and stabilized in the afternoon, down about 20 points.
The headlines over the weekend suggested that the entire US/Iran process was about to reverse, and a drastic increase in violence was imminent. Thankfully this doesn’t appear to be the case and markets seem to have sniffed that out early. As we have seen on so many prior occasions, we’re waiting for the next announcement from Washington and Tehran. Markets are assuming it will be positive. Like every past example, who knows what’s likely.
Earnings season is in motion but it ramps up significantly this week. 93 S&P 500 companies announce this week and most investors are optimistic. S&P 500 earnings estimates for next year and two years ahead are climbing slowly. They’ve climbed consistently since last May actually. Even the US/Iran conflict did not interrupt the gradual lifting of aggregate estimates by the analyst community. This earnings season is expected to validate those projections.
As far as the stats so far. Here are results of the reporting stocks.
30 S&P 500 stocks reported
Beta-adjusted:
The beats are numerous. The individual stock performance is blah. It doesn’t seem to matter to the overall mood though. Talking heads and most financial outlets are emphasizing the number of companies beating.
Unless something dramatic happens, I think the markets will remain bullish through the season.
See you tomorrow.
-Mike
Visdom Market Commentary
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