August 2023 - Earnings 2nd Quarter

Earnings 2nd Quarter 2023 - Better Than Expected

Uniquely Waterstone for our unique Waterstone clients 

In this Issue: 

• Clark Capital Gauges: 
  • Key economic drivers
    
• Earnings 2nd Quarter 2023: 
  • Better than expected 
• Why We Need Recessions
  
• Summer insights:
  
  • Chautauqua Thinking: Literature (tween book suggestions), Climate Change documentary suggestion
  • Rochester in The News
  • Talent Watchlist: Young journalist, Gabe Fleisher
  • AI Video in September

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Economic Drivers by Clark Capital 2nd Quarter 2023

^{Ccmg.com, Guide to the Gauges for more detailed discussion.}

Clark Capital's gauges reflect the goal of the Federal Reserve:  to slow inflation and consumer spending by raising interest rates. Hence, Clark Gauges, Monetary Policy and Interest Rates currently register as slow. The biggest change: Investors are now getting skittish. Emotions are beginning to run nervous and Investor Sentiment gauge slows.  

How the stock market works:
Short term: Emotion and the flow of money.
Long term: Earnings. Share price follows earnings…eventually.

So we’re midyear and amidst 2nd quarter earnings. It’s helpful to also remember:

1. The economy looks backwards. The economy reports what happened.
2. The markets looks forward. The markets anticipate what’s next.
3. Earnings reports on the profitability of companies. Market prices speculate what’s ahead.

Given inflation and rising rates, analysts were pessimistic about corporate earnings for 2023. They expected quarterly earnings to fade (-6 to -7%) compared to last year. Roughly 2/3 through the S&P quarterly reports, 87% of companies reported better than expected with muted declines (-4 to -5%). Anticipated quarterly earnings for upcoming 2023 quarters are positive with anticipated growth ranging from +1 to +8% in 4th quarter. (Fortune.com, Aug 8, 2023)

It’s a slow growth environment. Services are doing better than goods. Consumer is still spending with approx. $533 billion of extra savings from the pandemic. Jobs are still strong with earned income. Spending and earnings are holding up better than expected but debt and defaults are beginning to creep in. Market multiples are generally optimistic and still overpriced.

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Recession – YEAY or NAY?

Although recessions are painful, they are also healthy. They clear out bad debt and weak companies. After 2 decades of cheap, cheaper, cheapest interest rates, the clean out would set the stage for new growth.

CHQ’s Climate Change Initiative: ongoing programs, events, classes and workshops to stimulate awareness, conversation and action. CHQ is life on the lake. 

CHQ's featured documentary: Plastics Earth by Janice Overbeck, concerned mom of 4 girls and first-time filmmaker. View on Amazon Prime.

Rochester in the News.....The Week Junior

Rochester’s Museum of Play Expansion is covered in a recent issue. Other lead stories: NASA, the Supreme Court, Conservation

Kids can’t pick up and peruse if materials aren’t laying around for their perusal. Scrolling is not the same experience.

Talent Watchlist

Gabe Fleisher, Wake Up to Politics. At age 9, this young journalist started each day with a newsletter to his one subscriber, Mom. By age 14, he published an email newsletter to interested subscribers including the Roth's. Now 21, a junior at Georgetown University, he holds official journalistic credentials in Washington DC and is supported by donations and subscribers. His goal is unbiased reporting to balance mainstream opinion media. Click [HERE] to visit WUTP and see this young person in action. If you, too are impressed, pass along this contact to the young folks in your circles as an alternative to social media input.

wakeuptopolitics.com

AI, the next disruptor. Thinking about preparing future generations in an AI world. What is the role of college? 

As referenced in July, The AI Dilemma, an introduction to AI by the Center for Humane Technology is a good way to start thinking about this topic. (excerpt above). Link: https://www.youtube.com/watch?v=xoVJKj8lcNQ (Watch Time: 1 hour)

Care to view this with company and conversation? Plan on attending a morning, afternoon or early evening session in our office on Tuesday, Sept 26 to hash out these ideas. More details after Labor Day. 

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  In the meantime, still more summer ahead…Go outside and play!