Jul 3, 2025 · 21 min · 8 segments
Throughout history, non-FDIC insured short-term dollar denominated debt redeemable at par on demand has been prone to runs, whether in money market funds, repos or uninsured deposits. Why would…
Michael CembalestHostThere's a team that's run by Dubrovko and his group at JPMorgan Securities and Equity Research, and they do a great job.
And they summarized some of what was going on in their piece last week, earnings surprise of around 7.5% compared to 4% over the prior four quarters.
I think the consensus thought there would be margin compression in seven of 11 sectors.
And then on company guidance,
only 25% raised, which is below the normal numbers for the last few years, but only 15% cut, which was the lowest share of companies cutting guidance in Q1 in five years.
So I take that as a positive, given how bad it could have been, given all the uncertainty around tariffs.
The MAG7 stocks continue to blow the doors off, 28% year-on-year earnings growth.
And stock buy backs were up around 25% with new programs announced by Apple and Google and Goldman and Wells Fargo and Verizon.
Again, it's another example of a very bifurcated market where the MAG-7 are driving capital spending and earnings, a lot of other things.
And earnings growth, again, you know, in the neighborhood of 30% from the MAG-7.
The rest of the S&P is puttering along at about 9%, which isn't bad in a low-grace, low-inflation kind of environment.
Now, the only caveat, and it's a big one, is you don't want to get too excited about Q1 earnings and economic data if some of it was influenced by a massive ramp up of imports where companies were on a precautionary basis accumulating inventory data.
And if you look at this, we have a chart here on real imports of consumer goods, excluding cars.
And in the first quarter, it shot up enormously and has since come back down.
And then if you also look at imports of pharmaceutical and other medical goods, those also went bananas in the first quarter.
So there's going to be some payback in the second and third quarter in terms of lower earnings growth, lower economics growth.
There's a team that's run by Dubrovko and his group at JPMorgan Securities and Equity Research, and they do a great job.
And they summarized some of what was going on in their piece last week, earnings surprise of around 7.5% compared to 4% over the prior four quarters.
I think the consensus thought there would be margin compression in seven of 11 sectors.
And then on company guidance,
only 25% raised, which is below the normal numbers for the last few years, but only 15% cut, which was the lowest share of companies cutting guidance in Q1 in five years.
So I take that as a positive, given how bad it could have been, given all the uncertainty around tariffs.
The MAG7 stocks continue to blow the doors off, 28% year-on-year earnings growth.
And stock buy backs were up around 25% with new programs announced by Apple and Google and Goldman and Wells Fargo and Verizon.
Again, it's another example of a very bifurcated market where the MAG-7 are driving capital spending and earnings, a lot of other things.
And earnings growth, again, you know, in the neighborhood of 30% from the MAG-7.
The rest of the S&P is puttering along at about 9%, which isn't bad in a low-grace, low-inflation kind of environment.
Now, the only caveat, and it's a big one, is you don't want to get too excited about Q1 earnings and economic data if some of it was influenced by a massive ramp up of imports where companies were on a precautionary basis accumulating inventory data.
And if you look at this, we have a chart here on real imports of consumer goods, excluding cars.
And in the first quarter, it shot up enormously and has since come back down.
And then if you also look at imports of pharmaceutical and other medical goods, those also went bananas in the first quarter.
So there's going to be some payback in the second and third quarter in terms of lower earnings growth, lower economics growth.
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