00:00 Speaker A
Hey Josh, so we’re taking a look at S&P 500 earnings versus expectations. So what you’re looking at here is how much earnings surpass what Wall Street expected. So you can see here your average over five years is 8.8%. So normally it’s very typical that a company reports earnings that are actually better than what Wall Street expected. That’s kind of the norm. When that doesn’t happen is when we start to get concerned. So what I want to highlight here is our shadowed period, which was in 2022. So 2022 was our most recent bare market. What you see there was a relative trend of earnings continuing to come in below expectations. Now Nicholas from Data Track was highlighting this chart this morning in his research, and what he said he’s most concerned about or most interested to see this quarter is of course we’re going to be talking a lot about guidance, what are companies saying about tariffs, but really where does this number go in the first quarter of 2025 is going to be a key question because again, typically in bull markets, which is what we’ve been in and you want to see more signs of bull market behavior, the S&P 500 would beat earnings expectations by about 6%. So you want to see something around that number. If you see something continue to be worse, then that’s perhaps a warning sign that things might actually be getting worse in the overall fundamental story for stocks.
02:58 Speaker B
And Josh, you know, we’ll be focused on earnings, but also guidance, of course, forecasts. You know, expect that CEOs and CFOs get on those calls and say, “Listen, I I can’t really give guidance. I can’t give you the guidance with a lot of confidence right now given all the uncertainty, the drama, the volatility.” How do you think the market would react to that?
03:46 Speaker A
Yeah, Josh, I mean, it’s going to be, honestly, an interesting sort of looming question at this point. So this is one way that we’re sort of maybe looking at earnings season to avoid that guidance question. But I think overall, we’re not going to know until we start to really hear from companies. I mean, you take Delta last week, they pulled full-year guidance stock actually rallied off that news perhaps indicating that maybe it was already priced into the stock, right? That’s kind of the key thing right now. A lot of these stocks have been sold off pretty heavily over the past month and a half or so. So perhaps bad news is already priced in, maybe investors are already expecting guidance pulls and not getting a clear vision of what’s going forward, and maybe it won’t actually weigh on the stock. It’ll be a little bit of a time to tell there.
04:54 Speaker B
All right. Thanks, Joshua.
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