{"id":1806117,"date":"2023-01-15T07:34:47","date_gmt":"2023-01-15T12:34:47","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1806117"},"modified":"2023-01-15T07:39:28","modified_gmt":"2023-01-15T12:39:28","slug":"signs-of-recession-pain-look-set-to-emerge-during-earnings-season","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/signs-of-recession-pain-look-set-to-emerge-during-earnings-season\/","title":{"rendered":"Signs of Recession Pain Look Set to Emerge During Earnings Season"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fsigns-of-recession-pain-look-set-to-emerge-during-earnings-season%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1806117&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47-->\n<div><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/af78c512b8243a532506b83f533791cf\" class=\"ff-og-image-inserted\" alt=\"image\"   style=\"display:none\"><\/div>\n<p>(Bloomberg) &#8212; Just as investors are celebrating the prospect of peak inflation and potential for a soft landing, this earnings season is likely to show there\u2019s still plenty that should keep them up at night.<\/p>\n<p>Bloomberg: Most Read<\/p>\n<p>The results of the US earnings recession will be revealed by Bloomberg Intelligence strategists.<\/p>\n<p>Despite analysts being busy cutting their forecasts in the last few weeks, there is still consensus about corporate profits for 2023 \u201cmaterially too high\u201d with or without an economic recession, according to Morgan Stanley\u2019s Michael Wilson, who warns that stocks can fall about 25% in the first quarter under pressure from poor earnings and guidance.<\/p>\n<p>Madison Faller is a global strategist at JPMorgan Private Bank and expects that management will provide cautious commentary given rising recession risks, increased inventories than normal, and wage pressures.<\/p>\n<p>\u201cWith developed economies slowing, we think Street estimates will likely continue to move lower, but not collapse immediately,\u201d Faller said. \u201cMargin degradation will likely continue into 2023 and will be the focus in management discussions with investors.\u201d<\/p>\n<p>Market participants will be closely watching five key areas this earnings season, with JPMorgan Chase &#038; Co. starting, Citigroup Inc., Bank of America Corp. and JPMorgan Chase &#038; Co. just getting started.<\/p>\n<p>Fed Pivot<\/p>\n<p>While signals from earnings are important, investors\u2019 attention is laser-focused on the Federal Reserve\u2019s next moves. With European and US interest rates likely to reach their peak this summer, any comments about the impact of monetary policies will be closely watched. Investors will also be curious to see if companies have managed to maintain low borrowing costs over the coming years, and avoid being affected by rising interest rates.<\/p>\n<p>In this context, earnings estimates fell for the majority of last year. Yet they\u2019re still too high, according to strategists like Goldman Sachs Group Inc.\u2019s David Kostin, who expects further cuts as the risk of a recession, margin pressure and new corporate taxes outweigh upside risks such as China\u2019s reopening.<\/p>\n<p>\u201cThe data is increasingly pointing toward slowing activity across the board,\u201d James Athey, Abrdn&#8217;s investment manager, said: \u201cVery few sectors now seem immune to the slowing. Realistically, I think we are still in the early stages of the impact of Fed tightening.\u201d<\/p>\n<p>Consumer spending<\/p>\n<p>Slowing demand will be a key focus in this reporting season, as it is a warning sign of recession. US data shows that consumers lost momentum in November due to higher inflation and interest rates. Americans are tapping into savings and leaning more on credit cards, raising the question of whether they\u2019ll be able to continue driving economic growth through 2023.<\/p>\n<p>For now, some companies have been able to overcome these headwinds. Nike Inc.\u2019s quarterly sales exceeded Wall Street estimates amid higher demand during the holidays and FedEx Corp. earnings beat analysts\u2019 estimates due to price increases and cost cuts. In Europe, Ryanair Holdings Plc, the region\u2019s biggest discount airline, raised its full-year profit target following a stronger-than-expected Christmas travel period, while holiday sales rose at Tesco Plc and many other UK retailers.<\/p>\n<p>The attempts haven\u2019t been successful everywhere. Tesla Inc. delivered fewer units than expected last quarter, despite offering generous incentives in its largest markets. This sent its shares plummeting. Macy\u2019s Inc. also expects to report fourth-quarter sales that were weaker than previously forecast, and sees continued pressure on the consumer in 2023.<\/p>\n<p>Reduced Job Opportunities<\/p>\n<p>Companies will be closely monitoring earnings reports for additional evidence of layoffs. This phenomenon is especially evident in tech where companies are cutting jobs at a rate that is similar to the beginning days of the pandemic. Recent announcements by Salesforce Inc. and Amazon.com Inc. show this. While Meta Platforms Inc., Apple Inc. and Alphabet Inc. slow down or halt hiring, Taiwan Semiconductor Manufacturing Co. prepares for lower-than-expected revenues by cutting spending.<\/p>\n<p>Goldman Sachs (Banking), Morgan Stanley, Credit Suisse Group AG, Barclays Plc and Credit Suisse Group AG all have either fired employees or stated that they would do so in the coming months. McDonald\u2019s Corp. is cutting corporate jobs, the first restaurant chain in the US to do so despite its relatively strong sales performance in recent years.<\/p>\n<p>\u201cA lot of companies have become too big for the shrinking economy and the more difficult regulatory environment, and they are indeed in a greater need for right-sizing,\u201d Marija Veitmane (senior strategist at State Street Global Markets), stresses the importance of \u201cimportance of looking at earnings guidance, which is likely to be a lot more negative that currently reflected in consensus estimates.\u201d<\/p>\n<p>Energy Prices<\/p>\n<p>The impact of falling power prices will be closely monitored after WTI oil tumbled over 35% from its March peaks and gas slid in Europe amid milder weather \u2014 a vast turnaround for commodities from just six months ago. Exxon Mobil Corp. (the largest US oil company) already stated that lower crude and natural gas prices have had a negative effect on fourth-quarter earnings.<\/p>\n<p>US energy firms\u2019 profits are set for a fourth consecutive quarter of at least double-digit growth, but could post year-over-year earnings declines from the second quarter of 2023 to at least the first quarter of 2025, according to Bloomberg Intelligence.<\/p>\n<p>\u201cSlowing global demand for energy commodities will weigh on the energy sector,\u201d Joachim Klement is the Liberum Capital head of strategy accounting and sustainability.<\/p>\n<p>Klement also noted that power prices are lower. \u201cgood news for sectors that have suffered a margin squeeze in 2021 and 2022. This is particularly pronounced in the consumer discretionary world.\u201d<\/p>\n<p>China opens its doors<\/p>\n<p>Commentary from companies with revenue and cost exposure to China will be closely scrutinized, after the world\u2019s second-largest economy fully reopened on Jan. 8. US and European luxury and mining companies have significant sales from China. Japan&#8217;s cosmetics industry and Southeast Asian tourism stocks should also be encouraged.<\/p>\n<p>The impact of the reopening of borders on global earnings might be limited given the number of Chinese Covid cases and the fact that many countries have imposed border restrictions on travelers from China, however.<\/p>\n<p>Corporate earnings elsewhere:<\/p>\n<p>&#8211;With the assistance of Ishika Mokerjee<\/p>\n<p>Bloomberg Businessweek: The Most Read<\/p>\n<p>\u00a92023 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Bloomberg) &#8212; Just as investors are celebrating the prospect of peak inflation and potential for a soft landing, this earnings season is likely to show there\u2019s still plenty that should keep them up at night. Bloomberg: Most Read The results of the US earnings recession will be revealed by Bloomberg Intelligence strategists. Despite analysts being &hellip;<\/p>\n","protected":false},"author":1,"featured_media":1806120,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[5458,11333,7548,8046,10069,3819,5793,8273,3785],"class_list":["post-1806117","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report","tag-bongino","tag-earnings","tag-emerge","tag-pain","tag-recession","tag-report","tag-season","tag-set","tag-signs"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1806117","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1806117"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1806117\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1806120"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1806117"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1806117"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1806117"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}