Cross posted with full permission from Sober Look:
Analysts have been pointing out that earnings for the S&P500 companies continued to surprise to the upside for Q2 results. The top-line numbers however were not nearly as impressive. In fact this has been the lowest percentage of positive revenue surprises since at least 3Q09 (see figure 1 below).
The global macro pressures have impacted revenues far more because of a sharp decline in commodityprices that helped improve margins.
Barclays Capital: – The global growth slowdown has had more of an impact on revenues, as margins were aided by a sharp drop in commodity prices in the second quarter. Additionally, … companies have begun to cut their forward financial outlooks, suggesting that macro concerns are beginning to weigh on corporate operating performance.
Given the recent reversal in commodity price declines, the ongoing macro concerns, and lower revenue guidance in the coming quarters, the Q3 earnings picture now looks far less certain. The strong market performance in recent weeks however seems to be ignoring this development.
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