Time for a change of pace. Yes, there are plenty of news around tariffs – the United States and European Union have figured out a trade deal, after all – but let’s first look at what we expect this week from earnings.
It’s a big week! First off, the market has been going nuts, as our Jamie McGeever writes, probably because companies are clearing ever-lowered bars (with about 40% of earnings in, about 80% of companies have beaten estimates in the S&P 500, a very high figure). Or maybe its just because everyone sees things going up, so they’re jumping in.
We’ll get more of those who have been driving things – the Magnificent 7 – this week, with reports from Apple, Meta, Microsoft and Amazon. (The latter dabbles in retail goods too, but the bulk of interest remains situated around cloud and AI related spending.
Those companies aren’t without headwinds, however – Microsoft dealing with hacks, Apple and its efforts to shift phone production and deal with regulatory scrutiny, and more. Either way, the concentrated focus worries plenty of people – the tech sector now accounts for more of the index than it did at any time since 2000. As Michael E. Chadwick CLU, ChFC, CFP® of Fiscal Wisdom Wealth Management told me, “in the 60s we had the Nifty Fifty; this time we’ve got seven – its terrifying.”
Tuesday brings UnitedHealth’s earnings. This company has been through it in the last year, facing massive backlash as a giant insurer and provider of care, and its new CEO will address cost-related issues as the stock has slumped dramatically. The estimate? $4.48 a share. The SmartEstimate from our company LSEG (which weights the most recent estimates from the best-performing analysts)? Just $4.07 a share. And we’ll see about that outlook if it restores it.
What else to look for? Exxon. Chevron. The EU trade deal includes a promise to buy lots of US energy – an amount that exceeds all of what the US exports, really – but if it comes from anywhere, it will be liquefied natural gas, given that’s the more palatable fossil fuel to the EU.
And in time, we’ll be looking at how consumers and businesses react to the certainty that has now emerged in this tariff war – that is, taxes of 15% or so for imports of foreign goods. Will Europeans buy the Ford F-150 with a lower tariff? Will luxury brands pass on costs to consumers, and if they do, will they buy?
Stay cool.
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By David Gaffen
