Today’s US equity rally has faded once again, with a +60 gain in the S&P 500 now a 20-point decline.
Early on in earnings season, companies really needed to crush it to get any traction. That’s the result of years of rampant sandbagging by analysts, with 80% of companies now beating the ‘consesnsus’. So what we’re seeing now is that even moderate beats are being met by selling. We’re seeing two pretty good examples of that today in TSLA (-10.7%) and INTC (-7%).
So it’s safe to add 5-10% to earnings and revenue ‘expectations’ to get what the market is really looking for. At the same time, with everything falling daily, we’re getting closer to the point of par.