If you look at the headline numbers, you’d think we were having a somewhat decent earnings season. But we’re not.
That’s according to top trader Steve Weiss, managing partner at Short Hills Capital.
The headline that you’ve probably read is something like what follows:
With 23 percent of S&P 500 companies having reported results, 67.5 percent have posted earnings above expectations.
“But what’s going on is this,” says Weiss. “Estimates have come down a lot. And the Street is so tense that when a company beats, we get a relief rally.”
And Weiss adds, that although 67.5 percent of companies have beaten expectations, almost an equal number have missed on revenues.
All told, that suggests to Weiss that companies are hitting these low numbers by cutting costs. And eventually there are no more costs to cut.
“Ultimately I believe any productivity gains will go by the wayside,” says Weiss. “I’d remain cautious on the market.”