“180 companies report earnings this week. The most we’ve had report all in the same week in five years.”
Companies Reporting Earnings This Week
Big week for earnings this week. There are 180 companies reporting. This is the most we’ve had in a week in five years. So far, earnings have been good with approximately 75% of the companies reporting are beating expectations. We’d like for that to continue especially because in D.C. they are talking about healthcare, the budget and the lower GDP numbers expected on Friday. Positive earnings have the potential to drown out the noise coming from D.C.
Retail Dying As Stores Adjust to Business Model Changes Due To Technology
At the same time, we are seeing business models change with technology having an impact. There are 2,880 retail shops slated to close this year. It’s only April and they’ve already announced 2,880 closures. That is double the rate of last year and at the current pace, will be higher than in 2008.
It’s not that the economy is going down, it is that the business model is changing. When you go to the mall you might not see your favorite store, you might have to go online. It is the pricing pressure pushing things down, which is good for the consumer in lower prices. But that means retailers have to get rid of some of the fat and that fat is stores.
Growth And Gasoline Prices
While we are talking about pricing pressure on retailers, let’s also talk about gasoline prices. We’ve seen some economic growth push up the price of oil. The downside is that the price of gas is roughly .20 per gallon higher than it was this time last year. It is give and take, you get growth that’s positive but that also pushes up prices in certain areas, especially commodities.
That’s why we are looking at the portfolios to see which positions and companies are earning money which causes prices to go up. This also shows which companies are being innovative and who might be using the disruption to their advantage.
Regional Survey Sends Message To D.C.
An indicator we love to look at is a survey put out by 7 regional banks after the quarter ends. The survey basically asks corporate customers: How are you feeling? We like this survey because it goes across all lines of business and across the country. The message they are sending is we are confident about the direction but we want more clarity.
That is why we chose our title, earnings as it relates to D.C. and retail dying. It all comes together.
Greg Powell, CIMA President/CEO Wealth Consultant Email Greg Powell here
Ashley Page, JD, MBA Senior Vice President Wealth Consultant Email Ashley Page
Bobby Norman, CFP®, AIF® Senior Vice President Wealth Consultant Email Bobby Norman here
Trey Booth, CFA®, AIF® Senior Vice President Wealth Consultant Email Trey Booth here
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
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