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earnings S&P 500

Maybe You’re Not A Lunatic Gambler After All, Earnings Beats Suggest

"Daddy needs a new pair of shoes."

Are you looking for a plausible excuse to keep buying equities or to generally stay long risk at a time when valuations are telling you that you might be a fucking lunatic gambler?

Of course you are. Because have a look at the following table (up to date through Monday) and then tell me why it makes sense to be long equities or credit right now from a valuation perspective:

Expensive

Ok, so what you need – whether you realize it or not – is a plausible narrative and fortunately, earnings season is thus far providing you with one.

 

In fact, as BofAML’s Savita Subramanian notes, “so far, 73% of companies beat on EPS, 83% beat on sales and 63% beat on both, the most EPS and sales beats we’ve seen at this point of earnings season since we began tracking data in 3Q11.” Here’s the table:

EarningsBigly

And if revised estimates prove to be any semblance of accurate (because you know, they always are), you’re going to have no trouble pointing to robust earnings to justify your gambling habit going forward:

BottomsUp

“Daddy needs a new pair of shoes.”

 

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2 comments on “Maybe You’re Not A Lunatic Gambler After All, Earnings Beats Suggest

  1. then they bury themselves in debt with bonds and this is supposed to end well when rates go up?
    all the corp stock buy packs had nothing to do with this?
    then Mr. D on video in Davos–SO CONFUSED!

  2. PaulMiller

    1. The world is awash with cash, primarily printed by Central Banks.
    2. The economies of both the Developed World and Emerging World are growing, so sales and profits are growing.

    From simple arithmetic, 1 + 2 = 3

    3. Cash is used to buy equities, and even bonds, as the money machine chugs on.

    Don’t fight this economic backdrop until either items 1 or 2 change materially.

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