The Beginning of Earnings Season
Weekly Note Commentary || October 10, 2022
This week marks the start of 3rd quarter earnings reports. We will see only a small trickle of earnings announcements this week and then get into full swing next week. Earnings season will continue into mid-November. Earnings reports take on a heightened level of importance this quarter given recent economic softness. Whether there are material earnings shortfalls, and the tenor of forward corporate guidance will determine the likely direction for stocks for the remainder of the year.
Later this week, two important inflation data releases will occur. On Wednesday we will see the September Producer Price Index followed by the Consumer Price Index on Thursday. These two inflation readings may provide some clue as to the future interest rate stance by the Federal Reserve Board of Governors. The market has been fixated of late on the question of whether the Fed will continue its furious pace of rate increases to combat inflation. Any whiff of a change in stance will likely lead to a change in investor sentiment. Until that time, the current conditions of uncertainty, volatility, price reversals, and sell offs seems likely.
While the present conditions can lead to heightened anxiety, we remind clients that cycles like these are the norm for investing. This season of uncertainty will pass, and a new bull market will emerge. Until that time, rest assured we continue to manage client portfolios judiciously, adhering to our long-standing investment philosophy of prudently accessing the capital markets to grow long-term wealth. If you have questions, please do not hesitate to speak to your advisor.
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