Earnings Watch, US economy, and earnings estimates Earnings Watch, US economy, and earnings estimates Earnings Watch, US economy, and earnings estimates

Earnings Watch, US economy, and earnings estimates

Peter Garnry

Head of Saxo Strats

Summary:  Salesforce reports Q1 earnings on Wednesday with analysts expecting 10% revenue growth and significant increase in EBITDA compared to a year ago. Broad economic figures published yesterday suggest the US economy is still growing robustly supporting the view that unless we get a crisis moment the economy will not warrant the Fed to cut rates this year. Finally, earnings estimates continue to rise in both the US and Europe suggesting the equity market is not betting on a hard landing or crisis this year.

Key points in this equity note:

  • Salesforce is the key earnings release to watch next week scheduled to report Wednesday after the US market close. Analysts are expecting a significant increase in EBITDA.

  • Economic data published yesterday suggest the US economy is still growing around trend growth up until end of April supporting the idea that the Fed will likely not cut the policy rate this year.

  • Earnings estimates in the US and Europe continue to increase as the equity market continues to price a soft contraction in real terms and still significant nominal GDP growth.

Earnings releases are taking a backseat

The Q1 earnings season is over and the earnings calendar is getting thinner. Next week the most important earnings release is Salesforce reporting FY24 Q1 (ending 30 Apr) earnings on Wednesday after the close with analysts expecting revenue of $8.2bn up 10.3% y/y and EBITDA of $3bn up from $1.2bn a year ago as the cost cutting initiatives are expected to significantly lift profitability for the business software application maker. Salesforce’s revenue growth is coming as technology spending is slowing as we have seen for all companies related to technology spending including Snowflake the other. However, the focus for investors and management is shifting away from 20% revenue growth towards free cash flow generation and it is our expectation that Salesforce is now on a path to significantly higher profitability over the next five years. Salesforce shares are up 58% this year responding to management’s focus on profitability.

Salesforce share price | Source: Saxo

The list below shows the most important earnings releases next week:

  • Tuesday: HP, HP Enterprise
  • Wednesday: Salesforce, Crowdstrike, Okta
  • Thursday: Broadcom, VMware, Lululemon Athletica, Dell Technologies, MongoDB, Zscaler, Dollar General, Hormel Foods

The US economy rebounds in April

The US banking crisis earlier this year set in motion an expectation of tighter financial conditions and increased the market’s assessed probability of a recession leading to the market suddenly pricing in three rate cuts by the end of the year. We continued to argue that economic growth and labour market were strong enough and that investors were making the mistake again about expecting lower inflation and rate prematurely. Financial conditions have done nothing but easing since the US banking crisis started in US regional banks and are now as easy as during early February.

Chicago Fed National Activity Index figures for April showed yesterday that the US economy rebounded in April to levels above long-term trend growth while the 3-month average is still suggesting slightly below trend growth, but still comfortably above the recession threshold (orange line in the chart). In addition, initial jobless claims and job openings in the US labour market continue to paint a picture of a tight labour market favourable for wage growth and thus mitigating some of the negative effects from inflation.

While many fixed-income indicators can be used to project a recession the equity market is still quite calm about these prospects expecting just a mild real GDP contraction with nominal GDP growth continuing at 5% lifting revenue and earnings for companies.

Nvidia share price | Source: Saxo

Earnings estimates are only gone up since Q1 earnings season started

The positive outlook and robust economic activity levels are also evident in 12-month forward earnings estimates for the S&P 500 and STOXX 600 indices up 0.4% and 2.5% respectively this year jumping much higher since Q1 earnings began rolling out. While US equities have lately been trading sideways there is a growing risk of equities come a bit under pressure should the Fed communicate that the policy rate needs to be set higher to effectively lower economic growth to constrain inflation.


The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.