October Insights

The Glimmer of Hope

The widely anticipated third quarter earnings season in the US has been met with hopes that strong results could stem the tide of recent market losses. We are nearly halfway through, and the picture has been mixed with generally positive results being somewhat offset by a few exceptions, namely Alphabet and Meta Platforms. Despite corporations tightening their belts the consumer seems to be in decent shape. Major results will be discussed in the monthly commentary with a lot of water still to flow beneath the bridge.

To inform clients of how companies listed on the S&P 500 are faring during earnings season alongside those in High Street’s funds we have launched an earnings tracker. This will regularly published on our social media channels and periodically on the HS Existing Client’s page. The upper half of the image displays revenue performance of the companies that have reported results thus far while the lower half shows the bottom-line earnings per share. Pleasingly, your investments continue to perform well relative to the index.

Generally, companies have reported strong revenue growth with earnings contracting slightly inline with analyst expectations. The decrease in profit margins can largely be attributed to inflation of input costs and technology companies with bloated workforces from management falsely believing the lockdown-induced hyper-growth would continue. Cost control is the name of the game, and we will be watching closely to see how management teams navigate this. With the exception of online advertisers, the beginning of earnings season has been reasonably pleasing and a strong showing from the remaining companies yet to report may be enough to begin stemming the market losses.



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