Earnings season is here. And corporate profits in America are really heating up. Now, aside from the one offs, "XYZ company just beat earnings expectations," the mainstream media has gone decidedly mum on this big picture trend.
On the flipside, partisan journalists gets very loud on each market down day, despite U.S. stock indices being up between +15% and +22% since Election Day. Economic reality has a funny way of being obscured by all this noise.
Here are some cold, hard facts from Hedgeye CEO Keith McCullough in today's Early Look.
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"So far, 46 of the SP500’s companies have kicked off Q2 Earnings Season:
So, when Energy reports, you definitely want to “back that out” of accelerating US profit growth (after not backing it out during the Energy bubble years) as you “back out the Tech names” that are driving a YTD return for the Nasdaq 100 of +20.9%." |
See the Chart of the Day below.
Earnings Season Is Accelerating
Remember, the most recent data on Corporate Profits shows a ramp to +9.3% year-over-year. Recall this trend of profits accelerating comes after five consecutive quarters of negative year-over-year profit growth in which the U.S. economy also fell for five quarters, from 3.3% year-over-year growth in the first quarter of 2015 to 1.3% in the second quarter of 2016.
GDP has since rebounded to 2.1% year-over-year growth in the first quarter of 2017. Meanwhile, first quarter earnings for 2017 reported the best aggregate earnings growth since 2011.
Bottom Line
Stick with our U.S. growth accelerating call as corporate profits continue to heat up alongside the broader economy. We're also sticking with our call to stay long "Large Caps, Growth Stocks & Tech," the style factors that perform particularly well in this #GrowthAccelerating environment.
