Q2 earnings will deliver upbeat outlooks
The Q1 earnings season was a big win for MSCI World vs US (S&P 500 and Nasdaq 100) with earnings accelerating up 22% from Q3 2019 showing that the global corporate sector has already erased the losses experienced during the pandemic. Nasdaq 100 EPS growth q/q slowed down in Q1, and it helped fuel the reflation/value stocks trade. As we have recently described the reflation trade has lost a lot of steam and the Q2 earnings season will in that light be interesting for investors considering how much to rotate out of growth stocks. We expect energy and materials sectors to do well based on the high commodity prices with health care and technology stocks also delivering solid growth. Q2 will mostly be a positive catalyst for equities as we think it is too early to talk about cuts to outlook based on higher input costs; that is a potential theme for Q3 or Q4. The Q2 earnings season starts next week with the biggest names reporting being:
Tuesday – PepsiCo, Fastenal, JPMorgan Chase, Goldman Sachs, Conagra Brands
Wednesday – Wells Fargo, BlackRock, Delta Air Lines, Citigroup
Thursday – US Bancorp, UnitedHealth, Cintas, Morgan Stanley
Friday – Charles Schwab, State Street