Earnings, Earnings, and More Earnings

Recently, all the talk has been about inflation, but remember earnings? We are on the verge of learning how well public companies have been doing. Earnings season is upon us. The Bull and his partners believe that this will be more important to future stock prices than all the talk about inflation. An asset that earns more is worth more!

Slightly elevated inflation is now a fact. We have thought all along that it would be sticky at current levels. However, companies know how to handle it. They have benefited by being given the cover to raise prices and in many cases improving profit margins. Did anyone say gouging? Yes, there have been plenty of examples. Competition is the cure, but in the meantime, profits are likely to be good.

First quarter earnings for the S&P 500 companies are expected to be up over 10 percent, on average, over the same period the previous year. Importantly, profits are expected to continue to grow. So, although we as investors will go through bouts of volatility, the underlying trend should be positive. Stay steady my friends.

The Lonely Bull