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Talk about not showing your full Trump financial model to investors.
Earnings season is well underway and, by and large, things are going pretty well.
About 81% of S&P 500 companies have beaten analyst earnings estimates, according to data from MacroMicro. The biggest beats relative to consensus are coming from the materials, real estate, financials, and tech sectors. So far the energy and healthcare sectors have left much to be desired.
“Magnificent Seven” components have shown good results, headlined by Meta (META) and, to a lesser extent, Microsoft (MSFT). Stocks are continuing to chug along this earnings season, notwithstanding the recent one-day DeepSeek-fueled clobbering (which Snowflake’s CEO Sridhar Ramaswamy told me on Yahoo Finance’s Opening Bid podcast was justified).
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But I have to say, I’m not really digging the commentary on earnings calls regarding future policies from the Trump administration. And I’m really not liking what top leaders are telling me on and off the record.
While there is optimism around regulations and taxes, it’s as if Trump has frozen the action-oriented public company C-suite. Execs are tepid about taking bold risks until they gain more clarity on taxes and tariffs.
In turn, execs aren’t sharing worst-case scenario guidance ranges out of the block in 2025, which would be helpful to investors (although I get why they aren’t releasing this stuff — it could be an ugly headline and draw ire from the president). This has all the makings of investors being let down on corporate profits this year, among other disappointments.
“I would tell you, stabilization right now is prudent,” veteran IBM CFO Jim Kavanaugh told me. “There will be a lot of change, which is happening, and you’re seeing that come out. In the last couple of weeks since the inauguration, we’ve obviously been doing our work around scenario modeling and planning tariffs. You have to differentiate what is a company-specific, industry-specific, or just general enterprise business-specific implication of each of these.”
IBM still came out with above-consensus guidance this week, owing to momentum in software and AI bookings. But can it deliver if there are major changes to tariffs and immigration policies (which could weigh on performance in the consulting business)? Not sure, though it’s a key risk to keep in mind.
#Trump #confused #Csuite
