Three big things you need to know: First, the early S&P 500 stats are now pointing to a mildly disappointing 3Q24 reporting season so far. Second, a mixed backdrop, the need to wait a bit longer for interest rate relief, and the need to get through the election were key themes in last week’s earnings calls. Third, the US election has been in focus in our recent meetings with US-based long-only investors, who we encourage to be ready for all outcomes.
If you’d like to hear more, here’s another 5 minutes. Now, let’s jump into the details.
Starting With Takeaway #1: The Early S&P 500 Stats Are Now Pointing to a Mildly Disappointing 3Q24 Reporting Season So Far
When we crunched the data late last week, here’s what jumps out to us on the stats so far:
• The percent of companies beating consensus forecasts on EPS and revenue within the S&P 500 are now both tracking a little below 2Q24 – coming in at 76% on earnings (down from 80%) and 58% on revenues (down from 61%).
• Russell:
• The rate of upward EPS estimate revisions for the S&P 500 has averaged just 42% over the past four weeks, pointing to mostly downward revisions.
for:
Moving on to Takeaway #2: A Mixed Backdrop, the Need to Wait a Bit Longer for Interest Rate Relief, and the Need to Get Through the Election Were Key Themes in Last Week’s Earnings Calls
As always, our team has been reading through earnings call transcripts.
• Last week, discussions of the outlook, macro backdrop, and business conditions remained mixed. Companies with a more positive tone highlighted healthy end markets, comfort in current trends, low unemployment, moderating inflation, stability in short cycle businesses, a slowing but resilient economy, low recession odds, and robust deal pipelines. Companies with a more negative tone highlighted mixed end markets and macro indicators, choppy or sluggish demand, consumer reluctance, economic softness, and a worse third quarter than anticipated.
• Geography, especially China, became more in focus as sector representation broadened out. Companies emphasized ongoing challenges, uncertainty, and weakness, along with optimism about the coming impact of stimulus, though several noted it was early days.
• The Fed and interest rates generally remained very much in focus. Some companies were optimistic around the positive impacts of rate decreases, while others dwelled on the negative impacts of the high levels of rates that remained in place. Several noted real relief here will take more time.
• Unsurprisingly, the US election came up quite a bit, and there were numerous references to the uncertainty that the event has created and its impact on business activity. Several companies noted the need to simply get to the other side. We took note of one company that emphasized they’d be able to navigate regardless of outcome. We also found it particularly interesting when one homebuilder highlighted how their active adult buyers seemed most sidelined by the event.
That’s all for now. Thanks for listening. And be sure to reach out to your representative with any questions.
