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Matt's Market Insights

 

Nearly three quarters of S&P 500 companies have reported Q3 earnings and so far results have been decent. As of Friday, 74% of companies that reported have beat earnings estimates and 53% have beat revenue estimates. This puts earnings growth at roughly 3.1% year-over-year if the trend continues. The big gripe that investors have been complaining about is the lack of revenue performance. Investors tend to rely more on revenue growth for indications that companies (and the economy) are expanding than on earnings growth. This is because earnings growth is easily manipulated by anything from cost cutting measures to accounting gimmicks.

 

As companies "lean-out" their income statements to drive earnings growth, labor is often one of the first places they look. Thus the need to maintain earnings growth on flat-lining revenues can add even more headwind to the employment situation.

 

I've been wondering for a while now whether the labor market problems are ... Log in or subscribe to continue reading.


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