Mike’s Morning Brief: A fast-break rundown of what’s going on.
Market opens flattish again, with the S&P and NAS at fresh highs and the DOW in spitting distance. Earnings have thus far been solid, but unspectacular. Conviction seems to be lacking with a lot of complacencies seemingly built up in investor psyche. Volume has thinned quite a bit. It happens every year. It’s Summer. Morgan Stanley had some nice things to say this morning, which is sending the stock higher in early trading. Deflation is a diminishing risk in Europe, so says the ECB. Trade was a theme at a US-China business leaders summit in Washington. The private sector is collaborating to address crippling trade imbalances across the Pacific. Apple hired a new executive to lead its China business, with plans to turn it around. The theme of the week is earnings. The S&P is expected to earn $31.42 in Q2. That would translate to an 8.1% increase year-over-year. Q1 saw 15% growth, the largest quarterly increase since 2011. Earnings expectations for Energy have come down quite a bit with falling Oil prices. 10 of the 11 S&P sectors are expected to record positive year-over-year earnings growth in Q2, but only 3 are expected to beat the total 8.1% gain. Energy, Tech, and Financials are expected to grow faster, while the rest of the sectors are expected to grow slower than the composite. Tech and Financials are the 2 largest sectors in the S&P, which means they have the greatest impact.
Have a great morning,
Mike Frazier
