Q1: Corporate results are among the best recorded in the past 10 years

The 1Q 2021 reporting season is coming to an end in the US and in the Eurozone. Corporate results are among the best recorded in the past 10 years, thanks not only to strong year-on-year earnings growth (+45% and +50% respectively per S&P500 and EuroStoxx), driven by a statistical comparison effect, but also to a number of earnings surprises at their highest for the fourth consecutive quarter. In addition, the outlook for the remainder of the year, as outlined by businesses, is for a further improvement.

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Recovery monitor - Q1 2021

The reporting season confirms the US’ recovery path, along with China’s growing GDP: good news from the Eurozone, which is also beginning its recovery journey, even if later than others. High-frequency indicators back up the alleged recovery by these economies. Discover our experts’ analysis in this scenario!

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It’s beginning in the US the earnings reporting from Q1

This week in the US (and Europe towards the end of April) will begin the business earnings reporting season for the 1st quarter. After many positive surprises from the last three seasons, the progress of vaccination campaigns and fiscal policy stimuluses, analysts have increased their expectations on earnings growth (to a yearly 24%) and profits (to 6%) not only for the 1st quarter, but for all of 2021.

The future numbers up for publication in the next days will tell us if analysts kept on maintaining an overly cautious profile, despite the increasing expectations. This is still probable, considering the economic recovery has always been seen as increasing after data-led improvements, especially the ones from the end of the quarter.

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Recovery monitor

Nowcasting models are showing a constant performance distancing between the US and China (expanding) and the Eurozone (contracting, due to slowness in vaccinations). But this distance should be closed during the spring.

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USA, Flow of funds

Family patrimonies reached new record levels thanks to stocks, real estate value and fiscal stimulus. New highs for stock evaluation indices as well.

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China: after Covid’s air pocket the goal is a “quality” growth of at least 6%

Yesterday the press conference held by Chinese PM Li Kequiang ended with the closing of the National People’s Congress (NPC), which is along with the Chinese People's Political Consultative Conference (CPPCC) part of the “two sessions” (lianghu in Mandarin), the two main institutional assembles designed to receive the CCP’s directives and create China’s future economic and political direction.

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Reporting Season of 4Q in 2020

The 4Q 2020 earnings reporting season is coming to an end in the United States. The results disclosed are markedly positive, and outline a solid recovery of earnings, following up on extraordinarily good 3Q numberst.

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Recovery monitor

Twenty-twenty-one will be the year of the global economic recovery. However, the recovery risks being delayed by a few months in the Eurozone by the increase of new Covid infections, that have obliged national governments to extend restrictive measures. Nonetheless, in all likeliness this will be the tail end effect of the pandemic on the economy. Starting in the spring, thanks to the vaccines and to the support offered by markedly accommodative fiscal and monetary policies, the recovery will pick up again in Europe as well.

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The 4Q corporate earnings reporting season

The 4Q corporate earnings reporting season began this week in the United States (with Europe to follow at the end of January).
The positive surprises recorded during the previous reporting season prompted analysts to improve their forecasts for 4Q, that nonetheless remained cautious, allowing room for further surprises.
In light of the new restrictive measures put in place to contain the spreading of the virus over the winter months, analysts expect a modest reduction of earnings on a quarterly basis, that would keep the year-on-year change negative, at close to -9% in the US.

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