Strategy Report

Earnings In The Spotlight

22 Apr 2016

by Peter Berezin, Chief Strategist

The reflation trade will continue for a few more months on Chinese fiscal/monetary stimulus and a more dovish Fed. Despite a slightly better-than-expected start to the earnings season, Q1 S&P 500 profits are set to fall for a fourth consecutive yoy decline. Ex-energy, things aren't so bleak. Domestically-focused companies will experience flat earnings and modestly-positive revenue growth in Q1. Although margins have almost certainly peaked, their decline will be drawn-out. Remain overweight Europe/Japan/China versus the S&P 500 (currency-hedged).

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As BCA Research’s flagship publication, the Global Investment Strategy service provides macro-based investment recommendations across all asset classes, geographies, and time horizons.