(150 companies announce spending plans)
One-time bonuses: 30 percent
Retirement contribution: 20 percent
Expand buybacks/dividends 20 percent
More capex spending: 40 percent
Source: Bank of America
The dividend story is expected to remain strong, but traders are pinning their hopes for a rally on two issues:
1. They are expecting a surge in buyback announcements. There were roughly $500 billion in announced buybacks for 2017. Early estimates are that this could go toward $800 billion in 2018, an increase of greater than 50 percent.
2. They are looking for more capital spending. It's particularly encouraging that 40 percent of companies that made comments on their spending plans mentioned increased capital expenditures. Jim Paulsen from Leuthold Group has noted that when business spending increases, the stock market, and in particular, capital goods stocks (technology, materials, industrials and energy), outperform.
"At least since 1950, the relative performance of capital goods stocks (those most sensitive to business spending) have done best when business spending is leading the economy, and have often underperformed when the economy was driven primarily by consumer spending," Paulson said in a note to clients on Monday.
Of course, this could all be upended by trade war headlines, another topic expected to be addressed by CEOs. J.P. Morgan's Jamie Dimon has already been vocal about tariffs; I expect him to pontificate more on this topic during the bank's earnings call on Friday.
President Donald Trump is expected to meet with Mexican President Enrique Pena and Canadian Prime Minister Justin Trudeau at the Summit of the Americas in Peru at the end of this week. It's still not clear if any new NAFTA trade deal will come out of the negotiations, but any progress on trade reform will be welcomed by markets as a sign that deals can be achieved.