This earning season’s ‘lower bar’ is an opportunity for markets
00:00 Brian Sozzi
What about another date now on the calendar, Christie? That’s July 9th, a tariff deadline. The White House has seemed to maybe suggest, okay, that’s not set in stone. Uh what’s interesting about that, Chris, is the market seems to have decided, listen, Trump has backed off his maximous position and whatever gets imposed here, we can live with. But I’m curious how how you’re thinking about it.
00:28 Kristina Hooper
Yeah, absolutely. So, I I really actually think that this can cut both ways a little bit too, right? Is you know, we there is some expectation that we’ll get a little bit more certainty as we move past that deadline, um either because it it gets pushed back or because some things get resolved. I I think that the expectations that have been priced into markets already are already for a bit higher inflation and probably for some lower growth. So again, just coming into this, the starting point is that that is is priced. One of the things that we’re watching, you know, in and I think is going to matter so much going into the summer is what we’re going to get from corporate earnings. So, you know, on that point around the trade policy uncertainty, there’s the big question of whether those higher prices from tariffs are going to get passed onto consumers and manifest as inflation or whether they’re going to get internalized by companies and get manifested as lower profit margins. I think going into Q2, we have a lower bar than we’ve had for the last several quarters. So we are still forecasting and and the market, you know, street consensus is still forecasting earnings growth. But the expectation this quarter is only for about 4% earnings growth for the S&P 500. If you look back at Q1, the expectations were for 7% and we delivered 12%. So I think that lower bar could actually present an opportunity for the market to outperform and for US companies to prove that they are exceptional, um at least in generating profits. So, you know, we’re really watching very closely to look at the hyperscalers. We do believe very much in the AI trend and see that continuing to evolve. Something like the BlackRock AI ETF is is one that we’re talking about a lot right here where so we’re going to get so much more information um in Q1 earnings and we think that that can continue to be positive, particular for that the the trend of AI and how that has been able to really um, you know, generate a lot of of profits, um as well as investment and CAPEX as well.
