Here’s a shout-out to my University of Rochester peeps, where I learned the Latin word – Meliora. That’s Latin for “better”, and you can find it in the root of English words like “ameliorate”.
Last week we wrote, “Real world earnings still determine stock price in the long run.” We’ve been cautious about real world earnings based on several factors including how low interest rates can stifle growth for financials, trade slowdowns impact costs and US bound remittance, and global growth slowdowns affect internationally sourced revenue. On the other hand, last week saw some important advances. Reuters reported that technology earnings (Microsoft and IBM) have been solid despite the regulatory pressure. The survey firm, Refinitiv IBES, data suggests S&P 500 profits could be up 1% instead of a small expected decline. Finally, the President is unabashedly directing (via twitter, naturally) the Fed to lower rates.
This is the key week for earnings season. About 30% of the S&P reports earnings results this week. The results from last week were moderately better. Let’s see if it holds.