The revenue season begins, and Wall Street is expecting experts to begin cutting down on comparisons. Wall Street and a group of experts have been fighting a fierce battle for two months over the refusal of many experts to reduce their gains in 2022 and 2023 in the face of what appears to be a declining economy. In a sense, the experts’ skepticism about reducing comparisons is understandable. Industry analysts are not macroeconomists. For the most part, they are not just thinking about the future of the US economy. They analyze what is going on in their companies and industries, and unless there is a major shift in data or their CEOs tell them things are different, they do not change their image. Many experts now bet that experts are forced to change the models. Among the early journalists, there has been a very high number who give bad advice. FactSet’s John Butters also reported over the weekend that 71 companies had offered nonprofits for the second quarter – the highest number since the fourth quarter of 2019, when 73 had given the wrong advice. Many analysts expect the second-half lead to fall sharply in the next few weeks. “All the big barometers we follow are prone to lead earnings and misses,” said Savita Subramanian of Bank of America in a recent letter to clients, referring to comparisons of earnings later in 2022 and 2023. The two biggest winners in Q2. : energy and aviation Oil companies are making a profit. With 50% more oil than it was a year ago, profits in the energy sector have been rising every month this year, and are now expected to rise 239% more than in 2021. The profits of oil companies have been so high that they have disrupted. all estimates of the S&P 500 profit. Q2 earnings for the S&P 500 are expected to rise 5.7% over the same period last year, but if the share price is not included, profits will fall by 3%, according to Refinitiv. Another bright spot: Everyone is walking. Aviation profits are expected to grow by 193%, “a major contributor to the growth of the Industrials,” according to Jonathan Golub at Credit Suisse. This morning, Delta Air Lines reported that the biggest need for business is leisure travel. Revenue was stronger than expected, although revenues were lower. The drug is also a bright spot: Revenues are expected to rise 19.8%, according to Golub. Bottom line: Amazon and Meta Outside of power, most shares saw a decrease in comparison: nine of the 11 S&P shares also experienced a decline in Q2 estimates, Refinitiv observed over the weekend. Five out of 11 are expected to see a real decrease in earnings. For the top five S&P 500 companies, the picture is mixed, but mostly low. Meta and Amazon have been heavily influenced by S&P this year due to a sharp decline in profitability assumptions. Major technical gains (Q2 2022 ests. Vs. Q2 2021) Microsoft raised 6% Rates down 6% Apple down 11% Meta down 28% Amazon down 79% Amazon’s economic downturn has made a huge impact on the consumer selection sector. the price has dropped by 34% this year), and the Meta decline has been a drag on communication services (price below 51%). Another source of income: banks Banks and other cash flows: The economy is expected to see a decrease of 20.8%, the largest share falling in the S&P 500. Big problem? Banks are taking “more debt to spend (> $ 4.0 billion?) Compared to savings of more than $ 7.0 billion in the second quarter of 2021,” said John Lynch, chief financial officer at Comerica Wealth Management. Direction: Everyone is looking forward to the downturn The Street expects CEOs to point out that rising prices will remain the talk of the second half, and that some will express doubts about continuing to raise prices before significant returns. from consumers. Some will expect the economy to decline sharply and will want to reduce trade expectations. “Weak guidance remains essential,” Subramanian said. That optimism – the feeling that there is another segment of the market coming up because experts will lower comparisons – has become increasingly common for some to see the risk has reached risk, especially at the end of the year if the economy does not fall. “While our market is showing a slowdown in economic growth of up to 40% it is clear that other risks have decreased,” Keith Parker told UBS on Monday.
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