Monday Musings: July 26, 2021

Jul 26, 2021


Public Trust Credit Team
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Q2 earnings are ramping up; economically sensitive sectors should perform well with less upside for tech

As earnings for the second quarter start to roll in, this week marks one of the densest reporting periods. According to research from Bank of America, earnings have come in 17% above expectations so far and the trend is likely to continue. Q2 in 2020 represented the trough for many companies’ performance during the pandemic, meaning that growth should look very good in comparison. We believe that economically sensitive sectors like industrials and oil & gas should see strong growth and sectors tied to consumer spending and the reopening should also see firm numbers. However, the same cannot be said for the technology sector which had a blowout year in 2020. We expect the tech sector to show more muted growth and earnings beats compared to others, though there is still upside potential as evidenced by Intel’s strong earnings last week. Overall, we expect earnings to surprise to the upside across the board for the names in our approved universe as the economy continues to grow and business conditions return to normal.

All comments and discussion presented are purely based on opinion and assumptions, not fact. These assumptions may or may not be correct based on foreseen and unforeseen events. The information presented should not be used in making any investment decisions. This material is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any financial and/or investment decision should be made only after considerable research, consideration, and involvement with an experienced professional engaged for the specific purpose. Past performance is not an indication of future performance. Any financial and/or investment decision may incur losses.

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