DWS: Tachtig procent bedrijfswinsten in VS beter dan verwacht, maar dat zegt niet zoveel

29 oktober 2018

Once again the majority of U.S. companies beat earnings forecasts. This quarter more than ever. And more than ever, the markets are showing what they make of this game.

While the U.S. president continues with his efforts to make America great again, America's companies are already one step ahead. They are great, their sales are great and their profits are great. So great that the analyst community is constantly surprised at how the companies can deliver such great results, as seen in their quarterly figures. The current reporting season has now been running for almost three weeks, and behold, U.S. companies have again managed to beat the numbers that most analysts predicted. But the analysts must slowly be realizing that U.S. companies always deliver. And even over deliver. And isn't that what investors should like more than anything: forecasts that are surpassed? This joy should be reflected in share prices, which should rise sharply with every reporting season. The data going back to 1998 shows that more than half of U.S. companies always surprise the markets – every quarter, whether the economy is in an upswing or a recession.

But stock prices reflect nothing of the sort, as our "Chart of the week" shows. More precisely, it shows three things:

We draw three conclusions from these observations:

In our opinion, given the high expectations, the quarterly results have so far been somewhat more mixed than expected, but overall remain at a pleasingly high level. We are therefore sticking to our forecast for the S&P 500 (3,000 points by September 2019) and consider the market correction to be overdone given the still quite good economic environment, as we explain in our CIO Flash “U.S. equities under pressure”. At the same time, we believe that the market will remain nervous in the context of the U.S. midterm elections (see “The Trump effect 2.0”).