2016 Earnings Season effect on the market

THE THRIFT SAVINGS PLAN ALLOCATION GUIDE Forums Message Board 2016 Earnings Season effect on the market

This topic contains 2 replies, has 3 voices, and was last updated by  12squared 2 years, 11 months ago.

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  • #18493

    rolfeskj
    Participant

    What do you guys think this earning season will bring for the market? Will it have a long term effect or dare I say a strong short term effect?

    At this time Alcoa is starting off by reporting their earnings this afternoon. It is expected that this was not a good quarter for the US and in fact expected to be the worst quarter for corporate profits since 2009 per Bloomberg.

    1) Is this already priced into the market and we will even see the market bump up slightly with expected figures?

    2) Will this lead to a short term “correction” due to such poor numbers?

    3) Is this just the start of the American economy showing weakness?

    #18501

    TS Paul
    Keymaster

    I generally think of the effects of one particular earnings season as confined to the short term. Earnings are managed and telegraphed so well these days that I doubt we will see many surprises and I suspect they are fairly well priced in.

    Long term, I don’t see these earnings as presaging a fall in the US economy, but rather reflect the strong dollar and low demand for oil and other commodities.

    The TSP Allocation Guide www.TSPallocation.com

    #18504

    12squared
    Participant

    “The International Institute of Management’s forecasting model showed that fewer than 20% of publicly listed companies on major U.S. stock exchanges grew sales and profits in 2015 over 2014, while the rest stagnated — i.e. sales or profits were flat or declining. Large-cap companies fared better than mid- and small-caps. But if large companies cannot find a way to grow, some market sectors could decline by 20% or more this year or in 2017 from their highs. Yet in this recent market rally, many investors see good economic data, more supportive central banks, and believe they are buying a dip.”
    http://www.marketwatch.com/story/why-this-market-rally-looks-like-a-classic-investor-trap-2016-04-14?mod=MW_story_recommended_default&Link=obnetwork

    TS Paul,
    Do declining earnigns signal the end of the current economic cycle is near?

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