Research Briefing | May 4, 2021

US | Q1 earnings: upward revisions continue for now

US earnings growth continues to surprise to the upside, with more cyclical sectors leading the way in the Q1 earnings season. This positive momentum supports our existing overweights on Financials, Materials and Industrials.

However, longer-term expectations appear overly optimistic. The bottom-up consensus points to an ongoing profit margin expansion over the next few years and we think this is unlikely against a backdrop of rising cost pressures and proposals for higher corporate tax rates.

We see scope for downward revisions to EPS forecasts as attention turns towards 2022 later this year, and this could prove a headwind for US equities in the context of elevated valuation multiples.

Back to Resource Hub

Related Services

Post

New Activity Trackers suggest momentum is waning

After a choppy first quarter of GDP data, our novel Activity Trackers (which incorporate proprietary daily sentiment data from Penta) suggest that economic momentum in EM Asia is on a softer trend in Q2 (at least outside of China) supporting our view of easing underlying inflationary pressures and diminishing appetite for further rate hikes.

Find Out More

Post

What AI means for economies, businesses, jobs & cities

Artificial Intelligence has the potential to fix the world's productivity problems, just as previous general purpose technologies such as steam power, electricity, and computers have, in our view.

Find Out More