Earnings & GDP Revisions

Earnings season is always a tenuous time, made more so this quarter because a host of important economic data comes out today and government statisticians will make benchmark GDP revisions. Weeks with lots of data are always interesting; but this one has the potential to be more wild than most. Because of the revisions data will change, in some cases all the way back to 1929. The biggest change is treating R&D spending as a form of investment, just like buying equipment. The theory is that it expands the stock of knowledge, which is then used to discover or develop new products. A similar change is being made for art that lasts more than a year - like movies, books, or hit TV shows. The net effect of these revisions will be to boost the level of GDP by about 3%. So with the top-line level of real GDP revised up, get ready because some portion of those who don’t like the president will claim this is part of a conspiracy to make the economy look better than it actually is. Whether or not you are a fan of many recent policy actions, I suggest you tune out the conspiracy-mongers. The changes have been considered for many years and just as easily could have been made under a republican President…except then it would be different people claiming conspiracy. Generally strong corporate earnings have aided the broader US markets. According to Bloomberg data, of the 305 companies in the S&P 500 that had posted quarterly results through Tuesday, 72% had exceeded analysts’ estimates for profit and 55% have topped their respective sales projections. Certainly the month was not without the typical earnings-related setbacks, evidenced by the hit to many of the Agribusiness names yesterday (Tuesday). Securities and Investment Advisory services offered through NBC Securities, Inc., Member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence. This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.