026: Second Quarter Earnings Season 07-24-23

Get ready for an engaging week ahead as we prepare for the reports of about 150 companies in the S&P 500. With companies like Microsoft, Alphabet, Meta, Visa, and even some energy companies like Exxon, this week promises to be a potential market mover. Keep an ear out for more updates as we continue to track the earnings season and its impact on the market. Have questions or comments? Reach out to us at podcasts at Verdence dot com. Listen in as Megan provides insights only a seasoned investment officer can.

Hello, this is Megan Horneman, the Chief Investment Officer for Verdance Capital Advisors, coming you you with Markets with Megan, what we're going to do is give a little bit of an update on what we're seeing thus second-quarter earnings season and then a preview of the companies that are coming out this coming week. So last week we concluded the second week of earnings season. The S&P 500 earnings are still expected to decline by the most that we've seen since the pandemic, but earnings season has been mixed. We've had some better reports, especially in the financial side, the big financials but we have about 60% of the companies that are beating their earnings per share estimate. We only have roughly 90 of the 500 companies that have reported thus far. The bulk of it is going to be this coming week.

But here's the key takeaways that we've seen out of the financials and a couple of the tech and discretionary names. First of all, there is still concern about the consumer. The consumer is not as solid as some of the headline and economic data shows. We're seeing that with some of the big banks and credit card companies increasing loan loss reserves for credit, for consumer credit, and we're actually seeing them taking losses already for delinquent credit cards. From a business perspective, the big banks are increasing their loan loss provisions, meaning that they're expecting more companies to default. The banks, the small and mid cap banks we got some information out of them and we're seeing that they're going to struggle for a while with an increase in regulations and now they're trying to repair their balance sheets. So there's no room for error there from a small and mid cap banking perspective. And then, lastly, we've seen margins are still a concern. We saw that with some of the companies that have reported this this far. So there's the four key takeaways we've gotten just out of what we've seen thus so far.

With earnings season, this week is by far the biggest week. We get about 150 companies in the S&P 500 report earnings. It's about 40% of the market cap, and they're the big names that could be market-moving: Microsoft, Alphabet, Meta, Visa and even some of the energy companies with Exxon. So keep your eye out. We'll be back to give you some more updates around what we see from earnings season. If you have any questions or comments, please feel free to reach out to podcast at verdence. com.