Faced with uncertainties, investors bet on Corporate America

We are now a few days before the start of the business results season. Moreover, This week, we have also drawn up a panorama of the issues around the first publications. In addition, A key moment when investors will be able to try to get out of the noise of customs duties. Consequently, Donald Trump announcements to focus on fundamental elements: evolution of profits by action.

When tackling this pivotal period, the first element to highlight, is that expectations were revised downwards. Nevertheless, According faced uncertainties, investors bet corporate to the Factseet study, which follows every week the evolution of profits, BPAs have been lowered by 4.3% since the beginning of the quarter. For example, To give a comparison base. Furthermore, over the past five years, the downward revision of expectations in a quarter is on average 3%.

Look up

The uncertainties. Similarly, in particular linked to customs duties, therefore led analysts to be more cautious in this second quarter.

But paradoxically, it is a factor that makes strategists quite confident. The reasoning is as follows. is summarized by Max Kettner of HSBC: “The overall expectations have been too reduced in our opinion”, creating “a very low bar”. Especially since American companies are particularly good at pushing analysts to revise downwards … to better surprise the day of publication.

The logical continuation of this reasoning, these are increases in revised upwards for the S&P 500. In recent faced uncertainties, investors bet corporate days, Bank of America has updated its end -of -year objective from 5600 to 6,300. For its part, Goldman Sachs increased from 6100 to 6600.

The general atmosphere is therefore rather optimistic, even though the American clues … are already at the highest, after a strong rebound in recent weeks, taken as always by the values ​​of tech. Yesterday the NASDAQ scored a new record, not far from the 23,000 points, while Nvidia reached the 4,000 billion market capitalization mark.

All while Donald Trump relaunched the soap for customs duties. extending the deadline from July 9 to 1^is August, and by widening the threat with new sectoral tariffs (copper, semiconductors, pharmacy).

The next few weeks will tell us if the American president goes to the end of his logic. if he retreats again. At this stage. this is the second option that the market seems to remember, given the movements faced uncertainties, investors bet corporate of the last days.

Impossible to predict what Donald Trump will do on August 1. but one thing is clear: uncertainty remains, and will push the Fed to delay more. A drop in rates in July is definitively buried. September also seems a fairly optimistic timing now.

The exceptionalism of Corporate America

If uncertainty is high on the American economy. investors have much less doubts about large companies listed in the S & P500. They continue to bet on the exceptionalism of corporate Americamore than on American exceptionalism.

After all. the S&P 500 is not the American economy and the index is mainly worn by a few main values ​​of tech, whose growth trends do not seem to be beginning. It is a formula by Bank of America that perfectly sums up the state of mind of investors: “The United States is not exceptional. but corporate America perhaps it “.

faced uncertainties, investors bet corporate Because beyond technology. S&P 500 companies have shown in recent years an ability to face shocks, to reorganize, and to pass price increases to consumers to preserve their margins.

And pricing power which will still be put to the test in the coming months. Because now that everyone has understood that there will be customs duties at significant levels. the question is who will support the cost. However. according to estimates by Goldman Sachs, it is less than 20% of the cost of customs duties that will be absorbed in the margins.

Estimation of the distribution of the cost of customs duties between the consumer, American companies, and exporters

Finally, another factor should benefit American companies for the next quarters, it is the evolution of the exchange. The dollar has been clearly depreciated since the beginning of faced uncertainties, investors bet corporate the year. which has aid the profits of American companies made abroad. 40% of the turnover of S & P500 companies is achieved internationally.

From the COVVID, we live in an environment where shocks follow one another and where uncertainty is high. And whenever investors have doubted. whenever the probabilities of recession have come back, it is the seasons of results that reassured the market. To use a formula often cited by investors: “You should never underestimate corporate America“.