Huge Number of Firms Beating Analyst Expectations
Quick hits: mid-terms, yield curve, abandoning Canada
1) Q4 S&P 500 earnings reporting has been quite strong
(Source: Refinitiv - March 25 2022):
- The 21Q4 Y/Y blended earnings growth estimate is 32.1%. If the energy sector is excluded, the growth rate for the index is 23.5%.
- Of the 497 companies in the S&P 500 that have reported earnings to date for 21Q4 76.1% reported above analyst expectations. This compares to a long-term average of 66%.
- The 21Q4 Y/Y blended revenue growth estimate is 15.1%. If the energy sector is excluded, the growth rate for the index is 10.9%.
- 76.7% of companies have reported 21Q4 revenue above analyst expectations. This compares to a long-term average of 62%.
Earnings beats by sector:
2) Will inflation derail Dems during mid-terms?
Biden’s ratings on economy trail both Trump and Obama. Foreign policy in-line with Trump, both topped by Obama.
3) Yield curve has flattened dramatically over the past year (and past couple weeks)
While it’s not yet inverted, it’s getting there. It isn’t unreasonable to expect a recession within the next 12 months.
4) Highest number of people left Canada since the 1970s. Big deal? Probably not.
Anecdotally, many are concerned about the state (and cost) of life within Canada. Everyone has a story about a friend or colleague that packed everything up to live in some far-off utopia. To be fair, this emigration narrative might be overblown a bit. Because immigration was restricted by many countries over the past couple years, a spike of pent-up emigration is expected.
Also, one should look at this relative to total population and in the context of net migration (immigration less emigration). The population in Canada today is about 65% larger than in the 1970s. On a per-person basis, emigration out of Canada actually appears much lower than historical standards. Finally, when adjusting for immigration, Canada’s net immigration rate for 2021 was 6.2 per 1000 population. More people are moving into Canada than leaving. In fact, the net migration rate into Canada is roughly double that of the United States and is one of the highest in the world.