Today's USA Today paper had some coverage of earnings. Near the bottom of the front page they have a box with the caption "The doubters were wrong" and a statement that earnings growth of reported companies is 6.7%. Analysts were expecting near 0 growth for the quarter. The main story is in the B section. The article starts out with all the good statistics. It says more then half the S%P 500 companies have reported now. It states 81% beat estimates. It goes on to talk about a few other good things. However, here is the 3rd paragraph from the bottom.
"There are, though, more troubling signs. Without Apple and financials, the S&P 500's growth would be 0%, Butters says."
It seems to me the doubters did not really get it wrong. Financial earnings are notoriously hard to predict and Apple had a blow out quarter well beyond any expectations. Hmm, everybody else lumped together really are giving us 0% earnings growth. Most of the major financials have now reported so it is quite possible that 6.7% growth being touted now may slip some as the rest of the companies report. I would bet that most people saw the first page and never read the article. I would also bet that most people that looked at the article did not read the entire thing. Technically what the newspaper said is true, but it certainly is trying to paint a rosier picture then is actually happening. Back in 2008 and early 2009 the huge losses in the financial companies made the overall earnings picture look much worse then it actually was. I think this helped drive the market lower then it probably should have been. We may have the opposite situation going on now. If Apple and the financial companies are making things look much better then they really are, the current rally may not be lasting. I guess time will tell.
Bob
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