Q4 Earnings To Look At
The day has finally arrived: nearly 12 weeks after his surprise victory in the 2016 Presidential election, Donald J. Trump will today be sworn in as the 45th President of the Untied States. A new era is surely here - Trump is the first U.S. President never to have held public office before, and the parade of his cabinet appointees demonstrates a profound difference in experience and interests from outgoing President Obama's.
Thus, the growth acceleration promises Trump ran and won on - lower corporate tax rates and deregulation, repatriation of U.S. revenues by bringing company headquarters back home, etc. - have already been priced in to a certain extent in what's now widely known as the Trump Rally, or Trump Rotation. Analysts largely predict economic improvements upon the new presidency, at least as large as the 3% growth we've begun to see in the late stages of Obama's tenure as president.
That said, even if policy initiatives begin immediately - and they still won't today, regardless; this is a day of tradition and celebration - results may not be seen in the U.S. economy for months or, possibly, years. Zacks Chief Strategist John Blank, on yesterday's The Steady Investor podcast, said policy shifts from the new administration are not likely to have a material effect until 2018.
"That's not to say the markets won't race ahead based on the news," Blank said. Meaning we could see another leg up in the Trump Rally once the inauguration is complete and Trump's presidency has been made official. This is consistent with the market's normal role of being a forward indicator to the nation's economy.
Before the bell this Friday, we see Q4 earnings season continue, with mostly in-line results or better. Industrial major General Electric GE and oilfield services company Schlumberger SLB met earnings estimates exactly, whereas defense firm Rockwell Collins COL beat on the bottom line by 5 cents per share.
Growth at these companies is another matter, however: GE and Schlumberger earnings year over year are down 11.5% and 58.5%, respectively, while Rockwell Collins sees revenue growth of 2% from a year ago. Of the three, only Schlumberger outperformed expectations on company revenues for the quarter.
These results follow yesterday afternoon's big beats from IBM IBM and Skyworks Solutions SWKS , both tech firms which profoundly outperformed analyst expectations. Nasdaq futures are up in today's pre-market, as are the S&P 500 and the Dow Jones Industrial Average.