Worst Earnings Season in 5 Years?

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The First Quarter of 2015 is now in the books, which means that we are about to kick off another earnings season this week.  Alcoa, the first of the S&P500 stocks to report -- a pride of place owing to its AA ticker -- does so on Wednesday after the bell.  While it will take a couple weeks before we get into the thick of it, when large cap tech, big banks and the mega-conglomerates start reporting, anticipation for this coming season is much higher than is typical.  

The strong dollar cutting into corporate profits, the low price of oil boosting transports but hurting energies, nasty winter weather putting a crimp in hiring and expansion, and turmoil in the Eurozone and Middle East, are some of the various bricks in this year's "wall of worry" that may affect this season's earnings announcements. 

Christine Short of Estimize says these headwinds could make for a rough set of reports. Her firm is looking for -1.1% growth on the S&P 500 and -1% in revenues. Let me underscore that those are negative numbers.  If Short's estimates became reality, this would shape up to be the worst earnings season in more than five years.

“You’re going to see almost every company mention the stronger dollar. We’ve only had 18 companies report up to this point, but almost everyone from Adobe (ADBE) to Nike (NKE) to Oracle (ORCL) – everyone’s mentioning the stronger dollar,” Short says.

But wait.  It gets worse!  On New Year’s Eve of 2014, forward earnings expectations underlying the Standard & Poor’s 500 index were pegged to rise 4.2% during the first quarter versus a year earlier,  ...

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The following article is sponsored by the Dr. Stoxx Options Letter


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