The first-quarter earnings season is now in full swing. So far, results have largely aligned with Wall Street’s low expectations. As to the quality of the reports coming in, we’ll offer a resounding, “Meh!”
That is to say, while not disastrous, both results and forward guidance leave a lot to be desired. They haven’t been bad enough to presage a market slump, but earnings like these by themselves are not likely to power the Dow to 16,000 (as analysts polled in this week’s Barron’s merrily expect).
Consider the money center banks such as Bank America and JPMorgan. On the surface they turned in good numbers last quarter. However, we can only characterize their loan growth as sluggish and their earnings surprises have largely resulted from cost cutting and reductions in the amounts set aside for bad loans. This suggests limited further room for them to grow. And that growth is likely already priced into the shares.
