EPS up GDP up | WAVE 2 FOMO

We are entering Earnings season and Estimates for GDP and EPS are looking better than feared. 

GDP revised up

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2023 is2.3 percenton July 10, up from 2.1 percent on July 6. After recent releases from the US Bureau of Economic Analysis, the US Bureau of Labor Statistics, and the US Census Bureau, the nowcast of second-quarter real gross private domestic investment growth increased from 9.6 percent to 10.5 percent.

Earning Estimates are Bottoming

• 113 S&P 500 companies have issued EPS guidance for Q2.
• This is higher than the 5-year average of 96 and the 10-year average of 98.
• 67 companies have issued negative EPS guidance, above the 5-year average of 57 and the 10-year average of 63.
• 46 companies have issued positive EPS guidance, above the 5-year average of 40 and the 10-year average of 35.
• Q2 has the highest number of S&P 500 companies issuing positive EPS guidance since Q3 2021.
• Information Technology and Industrials sectors have the highest number of companies issuing positive EPS guidance.
• Software and Semiconductors & Semiconductor Equipment industries have the highest number of companies issuing positive EPS guidance in the Information Technology sector.
• Electrical Equipment and Passenger Airlines industries have the highest number of companies issuing positive EPS guidance in the Industrials sector.
• 41% of S&P 500 companies issuing EPS guidance for Q2 are issuing positive EPS guidance.
• This percentage is equal to the 5-year average and higher than the 10-year average.
• Guidance is classified as negative or positive based on the estimate compared to mean EPS estimate before the guidance was issued.

Survival of the Fittest

• The Rolling Recession - Rolling Expansion them is also playing out in S&P Earnings estimates