Amid a clear weakening in incoming economic data, third-quarter earnings are coming in a bit ahead of expectations…again. Shocking I know. Corporate management teams have become so adept at lowering the bar that a lame horse could clear it with ease.
Prior to the start of earnings reports earlier this week, expectations for S&P 500 earnings growth had dropped to -5 percent for the third quarter, according to FactSet. But optimists take heart. If we eliminate the drag from the energy sector, which is expected to post an earnings decrease of as much as 65 percent due to the crash in energy prices, overall S&P 500 earnings are actually expected to rise a bit – a very little bit.
But this doesn't seem so bad in an environment of weak economic growth outside the U.S., a dramatic rise in the value of the dollar, and plunging commodity prices. Yet again, Corporate America shows its vibrancy and resiliency!