Earnings Season Keeps Getting Worse, Here's Why

The video discusses the current state of earnings expectations, highlighting that despite low expectations, earnings have continued to worsen over recent quarters. Analysts have adjusted their estimates downward, a practice known as sandbagging, to allow companies to potentially beat these estimates. The financial sector, particularly banks, faces significant challenges due to a flattening yield curve and market volatility. Cost-cutting measures are expected as revenues contract, impacting overall profits and earnings per share. The video emphasizes the importance of looking beyond immediate earnings to future quarters for signs of improvement.

What has been the trend in earnings expectations over the last several quarters?

• Expectations have been unpredictable.

• Expectations have remained stable.

• Expectations have been low, leading to frequent beats.

• Expectations have been consistently high.

What is the expected earnings growth for the next four quarters?

• Negative 8.7% year on year

• Flat growth

• Positive 8.7% year on year

• Positive 4.5% in the fourth quarter

What strategy do analysts use to allow companies to beat earnings estimates?

• Increasing estimates by 20%

• Sandbagging by lowering estimates

• Keeping estimates unchanged

• Raising estimates significantly

What has been the trend in the yield curve this year?

• It has steepened significantly.

• It has remained flat.

• It has fluctuated wildly.

• It has inverted.

How has the financial market volatility affected the financial sector?

• It has led to increased profits.

• It has caused a slowdown in capital markets.

• It has boosted IPO activity.

• It has had no impact.

What percentage of the S&P 500 is made up by financials?

• 40%

• 20%

• 10%

• 30%

What is the impact of the lack of momentum in financials and commodities?

• It has improved the first quarter outlook.

• It has had no effect.

• It has boosted earnings.

• It has made the first quarter look awful.