Global Macro Monitor

Good piece in today’s Investor’s Business Daily on the upcoming earnings season,

Negative energy is a term one hears at a yoga class. But for corporate America, a negative energy sector is one of several factors expected to have dragged down first-quarter earnings of the entire S&P 500, probably its first overall profit fall since 2009’s Q3.

The index’s energy sector alone is expected to post a staggering 63.6% year-to-year decline in earnings and a 33.0% annual fall in revenue from Jan. 1 to March 31, according to Thomson Reuters. The sector’s shrinkage is expected to weigh down overall earnings by 2.8% and squeeze average revenue 2.4%.

Weaker global demand, a stronger dollar and soft U.S. growth also sapped earnings strength in the first quarter…

Exclude the sagging energy sector, and the rest of the S&P 500 is expected to post a healthier 5.4% earnings growth in Q1 and a 2.8% revenue gain. But that still would be the weakest profit and sales growth of the past two years, except for the anemic 1.7% sales growth of Q4 2013.

Annual growth excluding energy has averaged 8.5% for profit and 3.8% for sales in the past eight quarters.

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