Market Rally & Earnings - S&P 500 自 4 月以来上涨约 30%，部分原因是关税对核心利润的影响小于预期 [5][6] - 标普 500 指数基于未来 12 个月盈利的市盈率高于 5 年和 10 年平均水平，引发了估值辩论 [7] - 德意志银行认为，尽管盈利增长，但投资者的股票配置仍处于中性水平，表明市场仍有上涨空间 [8][9] - 摩根士丹利指出，自 4 月以来，提高盈利预期的公司与降低盈利预期的公司相比，出现了 V 型复苏，表明股市上涨有基本面支撑 [3][4][5] Economic Factors & Risks - 经济学家们认为，移民限制导致的外国出生劳动力减少，可能对劳动力市场构成风险，影响工资、失业率和整体经济增长 [12][13][14][15] - 企业估值相对于经济利润而言，估值过高，与 2000 年互联网泡沫时期的情况类似 [16] - 投资者为人工智能的特殊性支付了高溢价，但如果盈利未能兑现，可能会导致股票估值过高 [21] Sector Composition & Performance - 标普 500 指数中，必需消费品、能源、医疗保健和公用事业等防御性行业的权重已从 30 年前的 40% 降至约 22% [23][24] - 巴克莱银行指出，大型科技公司的近期盈利增长超过了股价涨幅，表明如果盈利继续超出预期，这些股票可能还有上涨空间 [27][28][29]

Core Insights - The earnings revisions trend has shifted from a negative to a positive outlook, particularly noted in recent weeks as the Q2 earnings season progresses [2][4][14] Earnings Performance - For the 198 S&P 500 companies that have reported Q2 results, total earnings increased by +7.0% year-over-year, with revenues up by +5.5%. Approximately 82.8% of these companies exceeded EPS estimates, and 79.8% surpassed revenue estimates [4] - In the Tech sector, earnings rose by +15.2% year-over-year, with revenues increasing by +10.6%. Notably, 90.9% of Tech companies beat EPS estimates, and all reported exceeded revenue estimates [4] - The Finance sector saw a +17.6% increase in earnings year-over-year, with revenues up by +5.8%. Here, 90.0% of companies beat EPS estimates, while 76.0% surpassed revenue estimates [4] Sector Estimates - Since the beginning of Q3, earnings estimates have increased for half of the 16 Zacks sectors, including Finance, Tech, and Consumer Discretionary [5] - Q3 earnings for the Tech sector are projected to grow by +8.0% year-over-year, with revenues expected to rise by +11.2% [6] Company-Specific Estimates - Meta Platforms is expected to report Q2 results on July 30, with a projected EPS of $5.92 for Q3, reflecting a +1.2% increase over the past week and +2.6% over the past month [8] - Nvidia is anticipated to report Q2 results on August 27, with an expected EPS of $1.60 for Q3, showing a +0.9% increase over the past week and +1.8% over the past month [8] Future Earnings Expectations - The positive results from nearly 40% of S&P 500 members have led to an increase in Q2 earnings growth expectations, now projected at +7.6% year-over-year, with revenues expected to rise by +5.2% [10]

Investment Rating - The report maintains an overweight stance on Financials and Industrials sectors, indicating a positive outlook for these areas [6][31]. Core Insights - The equity market has shown resilience despite new tariff announcements due to limited import cost exposure for S&P 500 industries, perceived temporary nature of higher tariff rates, and significant drawdowns already experienced by tariff-sensitive equities [5][7]. - The new tax bill is supportive of large-cap equity indices, with reinstated and expanded expensing likely to lower the "cash" tax rate, positively impacting cash flow for companies, particularly in Tech, Communication Services, and Healthcare sectors [21][22][30]. - Earnings revisions breadth has improved significantly, transitioning from -25% in mid-April to +3% currently, which has supported market stability amid trade and macroeconomic uncertainties [6][13]. Summary by Sections Tariff Impacts - Limited import cost exposure for S&P 500 industries due to exemptions and ongoing negotiations has mitigated immediate risks from tariffs [5][8]. - Significant risks remain if tariff rates on China increase or if the USMCA exemption for Mexico is discontinued, which could affect multiple industries with high import cost exposure [10][21]. Tax Bill Implications - The "One Big Beautiful Bill" is expected to enhance cash flow for large-cap corporates through upfront R&D expensing and bonus depreciation, particularly benefiting capital-intensive sectors [21][30]. - The Foreign-Derived Intangible Income (FDII) incentive is designed to encourage US companies to retain intellectual property domestically, benefiting sectors with significant foreign sales [34][35]. Earnings Revisions and Market Trends - The breadth of earnings revisions has shown a positive trend, with Financials and Industrials sectors experiencing the most significant rebounds [6][13][24]. - The upcoming earnings season is expected to reflect a low bar for 2Q earnings, with a consensus expectation of 4% year-over-year EPS growth and 3% sales growth [52][63].

Strategists at Bernstein Societe Generale recommended buying Indian stocks with upward earnings revisions to navigate the market’s lofty valuations https://t.co/R3N4rORlx1 ...

Market Overview & Economic Concerns - Earnings estimates are declining, with decreases observed in almost every week over the past 10 months, specifically since April [1][2] - The economy is slowing, evidenced by economic surprise indices and retail sales data [3] - Market's high valuation, trading at over 22 times earnings, more than three times sales, and more than five times book value, raises concerns [3] - Risk-reward equation favors risk, suggesting a defensive posture [4] Investment Strategy & Defensive Positioning - Recommends raising cash, suggesting a 10-15% cash position is currently yielding returns [4][5] - Stock market upside potential is estimated at 3-5%, while downside risk could be 15% or more [5] - Suggests gold as a defensive play, noting its outperformance of the stock market since the 2022 bear market lows [6][7] - Advocates for at least a 5% allocation to gold, potentially more, given economic and geopolitical uncertainties [7] Macroeconomic Factors & Policy Impact - Wage inflation is a real factor impacting businesses [9][10] - The timing of potential Federal Reserve rate cuts is uncertain, with conflicting signals from Fed officials [10] - Concerns exist regarding the impact of the tax bill on the budget deficit [11][12] - Maintaining some cash enables investors to avoid selling at market bottoms and provides opportunities to buy during downturns [13][14]

Investment Rating - The report maintains an "Overweight" rating for Capital Goods and Software sectors, indicating a favorable outlook for these industries [57]. Core Insights - Leading indicators suggest a stronger earnings backdrop than anticipated, with high-single-digit EPS growth projected over the next year [4][9]. - Earnings revisions breadth has improved significantly, moving from -25% in mid-April to -9%, indicating a positive shift in earnings expectations [4][9]. - The Non-PMI Leading Earnings Indicator points to mid-teens EPS growth by the first half of 2026, driven by stable demand and reduced material costs [4][9]. - A weaker US dollar, down 11% from January highs, is expected to provide additional support for US earnings trends, with further downside anticipated [4][9]. Summary by Sections Earnings Outlook - The main earnings model forecasts high-single-digit EPS growth for the next year, supported by improving earnings revisions breadth [4][9]. - The Non-PMI Leading Earnings Indicator suggests mid-teens EPS growth by 1H26, driven by demand stability and lower material costs [4][9]. Sector Preferences - Capital Goods and Software sectors are highlighted as key beneficiaries of a weaker dollar, with significant inverse correlations between earnings revisions breadth and the dollar [16][21]. - Capital Goods are expected to benefit from infrastructure build-out, while Software is positioned to leverage GenAI for cost efficiency and revenue growth [13][15]. Market Dynamics - The report emphasizes the importance of earnings revisions breadth as a driver for industry group outperformance, particularly for Capital Goods and Software [12][22]. - The US equity market is preferred over international equities due to stronger earnings revisions in the US compared to Europe and Japan [22]. Financial Sector Insights - The Financials sector is viewed positively, with expectations of a stabilizing M&A environment and resilient consumer conditions [31][33]. - Companies are leveraging AI to enhance operational efficiency, which is expected to contribute positively to earnings growth [37][39].

Investment Rating - The report maintains a trading range for the S&P 500 between 5000-5500, indicating a cautious outlook on the market [4][6][11] Core Insights - The dispersion of earnings per share (EPS) revisions is increasing, suggesting that the upcoming earnings season may act as a rotational catalyst rather than affecting the index level [4][25] - The report emphasizes the importance of identifying high-quality stocks in industries that are less risky, such as Transports, Materials, Pharma/Biotech, and Tech Hardware [4][25] - There is a notable uncertainty surrounding tariff impacts, with many companies withdrawing guidance or adopting conservative approaches due to macroeconomic uncertainties [24][41] Summary by Sections Market Overview - The S&P 500 is expected to remain within the 5000-5500 range due to competing factors affecting both upside and downside risks [4][6] - Upside risks include a more dovish Federal Reserve, a broader trade deal with China, and improved earnings revisions, while downside risks involve declining business confidence and rising back-end rates [4][11] Earnings Revisions - Earnings revisions breadth is currently at -24%, the lowest since the 2022 growth scare, indicating a potential for further cuts to 2025/2026 EPS [41][42] - Cyclical and tariff-sensitive industries, such as Autos, Transports, and Tech Hardware, are leading the downward revisions [41][46] Sector Analysis - In Hardlines/Broadlines/Food Retail, companies are reducing exposure to China and absorbing about 50% of tariff costs, with no significant consumer slowdown observed [34] - The Tech Hardware sector is facing challenges due to tariffs, with enterprise spending remaining robust while small and medium businesses are delaying projects [37] - The Media & Telecom sector is experiencing weaker advertising spending, with companies adjusting guidance downward due to macro uncertainties [37] Investment Opportunities - The report suggests focusing on high-quality stocks in less risky industries, utilizing tools such as industry frameworks and quality stock screens to identify potential investments [4][25] - Specific companies identified as quality cyclicals include Halliburton, Schlumberger, and Ecolab, among others [47]