It’s still relatively early in the Q4 earnings season, with about 20% of S&P; 500 companies reporting. We’ll have a better view on Q4 earnings after next week as 130 S&P; companies and 12 Dow companies report.

Outside financials, which are bungee jumping off a super-depressed base of a year ago earnings, eps are tracking 9% YoY.

So far, nearly 80% of companies that have reported have beat expectations, which is significantly above the long-run average of 60%. On average, companies have beat analyst expectations by about 21% (long-term average is 2%).

While earnings have been strong, revenue results have lagged. On this basis, the blended rate is 5% year-over-year, which is lower than last week’s rate of 7%. Once Financials are stripped out, revenue growth is sitting at the grand total of 0% — down a percentage point from a week ago even as bottom-lines improved. The question going forward is how much more companies can cut costs – at some point sales need to increase in order to increase earnings. (on that, see the “profit” section of US EQUITIES VALUATION ANALYSIS: DUCK, YOU (HAPPY) SUCKERS!)

David Rosenberg


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