Will this be an eventful week? There are several profit reports from the Magnificent Seven. There is a data dump including initial estimates of second quarter GDP, PCE data, a labor report and a FOMC meeting. Ot will the hype leading into these top tier events be nothing more than noise?
Commenting about earnings, Bloomberg writes the results that have thus far been released on are on track for the highest share of “beats” since the second quarter of 2021. On the face this is impressive, but expectations were greatly diminished for a myriad of well-known reasons.
The S & P is at trading at 24.9x training earnings and about 22x anticipated profits and a 1.21% dividend yield. Against any backdrop, these basic metrics are “lofty.”
The WSJ validated that corporate America is absorbing a large part of the increased costs from the tariffs. How long will this continue? Will it crush margins? Will the big get bigger as the smaller brethren struggle to maintain market share as their ability to absorb increased costs is perhaps more difficult?
Regarding the FOMC meeting, little new is expected to emerge. The Committee may reiterate the outlook is unquantified but believe the inflation rate will permit the Central Bank to lower rates later in the year.
As noted, the economic calendar is comprised of many top tier indicators including various employment statistics including the JOLTS Jobs Openings and the BLS Labor report, initial estimates of second quarter GDP, a sentiment survey, the PCE data and a FOMC meeting.
Last night the foreign markets were mixed. London was down 0.09%, Paris up 0.49% and Frankfurt up 0.23%. China was up 0.12%, Japan down 1.10% and Hang Seng up 0.68%.
Futures are slightly higher on a potential US/EU trade deal amongst a very event filled week. The 10-year is off 3/32 to yield 4.40%.
