Nobody Is Saying Anything About How U.S. Earnings Season Will Go

(Bloomberg) -- Investors seeking hints on first-quarter earnings season are getting little help from companies.

In the past month, only 83 have published profit guidance of any variety, the least at this time of the year since Bloomberg began compiling the data in 1999. The stretch of quietness comes as banks including JPMorgan Chase & Co. and Citigroup Inc. are set to release results next week.

The silence adds to the air of mystery in U.S. equities, where valuations are high and volatility nonexistent as prices again lock themselves into a range after the four-month Trump bump. While tight lips contrast with the voluble optimism expressed in fourth-quarter conference calls, it may also betoken confidence.

“The general rule of thumb is bad news gets announced early rather than good,” said Michael Shaoul, chief executive officer of Marketfield Asset Management. “The most obvious thing to assume is that nothing has significantly changed and the trend is improving earnings.”

At the same time, the scarcity reflects a decade-long trend away from guidance that may reflect criticism about a short-term focus among executives. Still, the latest decline is the fastest on record. The number of firms speaking is down 35 percent from a year ago and trails an average of 150 at this time in the past five years.

Coinciding with the quiet has been a stretch of market indecision. After reaching an all-time high on March 1, the S&P 500 Index has been confined to a 55-point band, alternating between gains and losses every week. The benchmark just posted the lowest realized volatility to start a year since 1965, data from Deutsche Bank AG showed.

Bloomberg data shows firms forecasting that earnings will beat analyst estimates outpaced those predicting results that will fall short by a ratio of 2.1-to-1, the lowest reading in six years heading into any first-quarter earnings season.

Analysts are sticking to their bullish calls, forecasting 9.7 growth in S&P 500 earnings for the March quarter and 12 percent for the full year. That's a departure from the last two years, when growth estimates shriveled to zero as reporting season drew near.

“Investors have been digging deeply into their hope chests in search of the catalyst that will propel stocks to new highs,” said Sam Stovall, chief investment strategist at CFRA in New York. “Not surprisingly, better-than-expected EPS guidance could offer some near-term optimism,” he said. “Maintaining a double-digit growth for 2017 should go a long way in bolstering confidence.”

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net.

To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Chris Nagi, Richard Richtmyer