The 4Q20 earnings season started las week, better times lie ahead in 2021. The outlook for the final quarter of f 2020 does not look good. Early reporters expect a 4Q20 S&P 500 earnings per share of 37.31, a n4.8% contraction from last year. If this pans out this will be the fourth quarter of contractions. Companies that are under pressure in 2020 will continue to be under pressure this year as well.
Energy companies are expected to see earnings per share decline of 11% y/y due to the lower oil prices and lower demand. As we see social distancing measures easing the consumer discretionary companies should see earnings improve. A decline of 21% y/y and increase will be a good improvement. The finance sector is expected to see earnings fall -28%y/y due to lower rates and rising loan loss provisions. Healthcare and Technology should continue to benefit from the pandemic trends.
Earnings should contract 16% in 2020 but bounce up in 2021. The pandemic should begin to fade in the background and earnings will follow.
Notable Economic announcements this week.
- Flash Markit mfg. and services PMIs
- Existing home sales
Happy Monday. Good Luck out there this week.
Global Spotlight
Italy’s political crisis lingers on. The fate of the Italian government will be decided next week, as Italian Prime Minister Giuseppe Conte will ask for a vote of confidence in the Chamber of Deputies (on Jan. 18) and the Senate (on Jan. 19).
Navalny returns home. Russian opposition leader Alexei Navalny is scheduled to fly back to Moscow on Jan. 17 after spending the past six months in Germany, to where he was medically evacuated in August 2020 after an alleged assassination attempt by Russian security services.
FTO designation of Yemen’s Houthi rebels. The United States is expected to sanction the Houthi rebels in Yemen as a foreign terrorist organization on Jan. 19. The decision has sparked bipartisan pushback in Congress as well as concern in the humanitarian and aid community about the potential negative impact on delivering aid to war-torn parts of Yemen.
China’s recovery roars ahead. China reports gross domestic product data for 2020-Q4 and the year on Jan. 18, as well as data on industrial production and retails sales in December 2020.
Stratfor.com
Economic Calendar
Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.
Briefing.com
Last Weeks Numbers
Review Last weeks numbers here.
Earnings
Source I/B/E/S data from Refinitiv
Aggregate Estimates and Revisions
- 20Q4 earnings are expected to be -7.8% from 19Q4. Excluding the energy sector, the earnings growth estimate is -4.4%.
- Of the 26 companies in the S&P 500 that have reported earnings to date for 20Q4, 96.2% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 76%.
- 20Q4 revenue is expected to be -1.2% from 19Q4. Excluding the energy sector, the growth estimate is 2.0%.
- During the week of January 18, 43 S&P 500 companies are expected to report quarterly earnings.
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