Investors Ride the Struggle Bus

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Corporate earnings growth is the barometer for the health of the global economy.

Stock investors have had a rough ride lately. The top three culprits are the trade tariffs and their potential to erode profit margins, the Federal Reserve’s agenda for raising interest rates and slowing economic growth in China. A flare-up of yields in Italy and ugliness from Saudi Arabia aren’t helping. The auto sector especially has been in the crosshairs because of trade policy. What is not struggling is earnings growth; far from struggling on the stupid, smelly bus, they are riding a luxury cruise liner. So far, 80% of companies reporting third-quarter earnings have beaten estimates, reporting growth of more than 25%. What’s more, estimates for growth in the fourth quarter and in 2019 are looking optimistic. With earnings so good, it’s hard to understand why investors prefer the hot stuffy bus; in fact, the strong open this morning could actually lead to an up week.

Please watch earnings growth on page 6 of the Global Perspectives book and don't forget to register for the GP Quarterly Market Outlook Webinar!

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