If you’d like to hear more, here’s another 5 minutes.
Now, let’s jump into the details.
Let’s start with Takeway #1: It’s Been A Mixed Bag of Earnings So Far
% of the Russell:
• First, the beat rates for the S&P 500 have been decent. So far, 75% of S&P 500 companies are beating consensus on EPS (a little worse than last quarter), while 68% are beating consensus on revenues (a little better than last quarter).
ackluster. Within the Russell:
EPS in:
It’s still quite early in 4Q23 reporting season. But for the moment we feel like the broader US equity market is behaving a little better than we’d expect based on the results that have come in.
Moving on to Takeaway #2: What we’ve been reading in earnings calls transcripts
As has become our custom, our team has been reading through many of the transcripts of S&P 500 earnings calls to gain insight into what companies are saying that has relevance to the macro backdrop for the US equity market.
Key themes are still emerging. A few of main things that jump out to us so far:
improving,” “similar to:
• Consumers continue to be described as resilient, healthy and strong for the most part.
• Discussions regarding inflation, costs, and labor/wages continued to emphasize them as challenges, but a few companies admittedly discussed how these headwinds were lessening.
• Geopolitics continued to be highlighted as a source of uncertainty.
Next, Takeaway #3: What Jumps Out From Our High Frequency Indicators
Two new things this week:
• On sentiment, net bulls in the weekly AAII survey continued to retreat last week, reducing a near-term pressure on the US equity market.
• Meanwhile, positioning still looks stretched on the institutional side per the weekly CFTC data. Overall, the sentiment backdrop has improved a bit, but we remain on guard for a near-term pullback.
at YE:
p with a bonus thought on the:
• Questions about the 2024 election and its impact on the US equity market have continued to trickle in with a focus on the prospect of a Trump victory. We stress that we still think it’s far too early to make big calls here. But for the sake of conversation, we’ve put together a table with our preliminary thoughts on potential equity market read-throughs from the Trump agenda as outlined on his campaign website. We highlight things we think the stock market may like, which are more stimulative in nature, and things it may not, which appear to be potentially inflationary in nature.
d our stats on how different R:
• Though we’ve heard some non-US investors (who viewed a Republican sweep as likely) express reservations about owning Health Care stocks this year due to the election, it’s worth noting that our Biotech team believes Health Care policy will be more of a focus for Biden & the Democrats, and less of one for Trump & the Republicans.
That’s all for now. Thanks for listening. And be sure to reach out to your RBC representative with any questions.
