Good morning,

 

Markets were relatively unchanged over the past week with investors coming to terms with the low likelihood of an imminent U.S. stimulus package. This week also marked the official start to the earnings season.

 

Earnings season is upon us

The third quarter earnings season is now upon us, with hundreds of companies across Canada, the U.S., and Europe expected to announce results over the next month.

 

The expectation for the U.S. market, is for this quarter’s earnings to fall by nearly 20% year over year. In absolute terms, that is quite weak. Moreover, of the companies that historically provide annual guidance, more than half of them continue to withhold guidance for this year and next, due to the lack of clarity on the business outlook.

 

Yet, things are improving. The decline in earnings expected this quarter is less than the 30% decline seen last quarter. Furthermore, there has been a steady increase in the number of companies now willing to provide an outlook. And for the most part, the guidance has been better than expected with the number of companies issuing positive “pre-announcements” outpacing the number of companies warning of weaker than expected results.

 

This shouldn’t be too surprising. The economic data has itself improved through the summer and into the fall and has likely helped the operating environment for some businesses. To be clear, it remains far from normal, and I still expect it to take a year, for the global economy to attain the levels we saw in 2019. But, I am comforted by the progress that continues.

 

In addition, I’ve included an audio market update from Jim Allworth who is part of our Global Portfolio Advisory committee. Please click on the link below to listen.

 

http://www.rbcplayer.com/market_update_jim_allworth

 

Enjoy your weekend.

 

Tim