Strong corporate earnings are helping the US avoid a recession - but there are 2 big risks facing markets and the economy, Bank of America says
2023 earnings per share estimate to $215 from $200 due to the first-quarter earnings strength, representing an increase of 8%. Additionally, Kwon introduced the bank's 2024 S&P 500 EPS estimate at $235, which would represent annual growth of 9%.
"Earnings typically recover stronger than they fall and we expect 2024 to be a better profit environment after companies' focus on efficiency and productivity," Kwon said, adding that a weaker US dollar could also help boost profit growth next year.Additional upside drivers to corporate profits, the economy, and the stock market include a new capital expenditure cycle that leads to big investments from companies, with an estimated $600 billion in mega projects being announced since January 2021, according to the note.in which companies bring some or all of their production and sourcing capabilities back into America, some is also being driven by over $550 billion in fiscal stimulus that stems from the bipartisan infrastructure bill. These factors pale in comparison to the main factor that helped boost corporate profits over the past decade:"We expect productivity-led earnings growth ahead, rather than financially engineered growth from the last decade," Kwon said. But there are still two big, long-term risks that could negatively impact the economy and stock market, according to Kwon. Those risks are the rising trend of de-globalization and refinancing risks due to higher interest rates. "We are coming out of the best 20-year period for earnings growth, which began with China joining the WTO in 2001. De-globalization is a big secular risk, which drove most of the margin improvement over the past 20 years," Kwon explained. And while about 75% of corporate America's current debt burden is fixed at historically low interest rates, higher interest rates could still be a headwind for certain sectors, like Real Estate and Industrials, if the Federal Reserve doesn't cut rates in the foreseeable future.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Cannes: Mubi Takes ‘The Settlers’ for North America, Multiple International TerritoriesThe Felipe Gálvez Chilean revisionist Western premiered in Cannes' Un Certain Regard section.
Read more »
America’s farthest-north state representative is planning to leave the Alaska CapitolIndependent Rep. Josiah Patkotak of Utqiagvik is running to become the next mayor of the North Slope Borough and said he’s prepared to resign his seat in the Alaska Legislature if he wins the October municipal election. (via AlaskaBeacon)
Read more »
'Wake up, America': Newsom criticizes Target for removing LGBTQ merchandiseGov. Gavin Newsom slammed Target and its CEO for recently removing some LGBTQ merchandise from stores.
Read more »
House Judiciary Committee launches investigation into Bank of America disclosing customer financial infoThe House Judiciary Committee announced it is looking into Bank of America regarding allegations that the bank shared users' private financial information with the FBI.
Read more »