top of page

ENJOY THE RIDE – Q2 Earnings Season is Here



We are about to enter into the most controversial earnings season ever. We will witness the full impact of COVID-19 lockdowns into the US companies next week of July 13th, 2020.

Who did manage to adapt quickly to change? How much money was burned? And most important, What will they do next?


Our current hypothesis is that there will be a set of few sectors and companies that thrived or kept their businesses during this period. The Type A sectors (Technology, Software, Health Care, and Consumer Goods) might see benefits or be less affected. While Type B sectors- (Real Estate, Retail, Energy, Industrial, Banks, Airlines, Cruises, Hotels, Restaurants, etc.) might show massive impacts.

Surprisingly, these potential nightmare results we might hear do not mean their prices may adjust down or up as soon as they report results. It all comes down to expectations.

We all know Type B companies were affected greatly last quarter. The big question is by how much. If they were affected less than what investors expected, the prices might increase to reflect that, and likewise, if the impact was more extensive.

If we follow the same logic, even Type A company's prices might be adjusted down if their results are not as good as expected.

Without going into valuations details, we might agree both types of companies are richly value, given the circumstances. But the extraordinary liquidity pumped into the market by the Federal Reserve and the Government, and their unconditional future support provides an unconventional incentive to take risk positions.

Therefore, we find ourselves in a "show me the money" mode where slight changes in company assumptions might cause wild fluctuations of prices, as expected. More important, investors will be very focused on what companies tell us about future results and challenges.

This is nothing new to the markets, but the level of uncertainty and volatility we might expect could be surprising to some people. So fasten your seat belts and get ready for the ride!.

Comments


COMPANY
SERVICES
Financial Planning
GET CONNECTED
  • LinkedIn Social Icon
  • Facebook
  • Twitter
  • Instagram
MAIN OFFICES

8350 Ashlane Way,

The Woodlands, Texas 77382

400 University Dr., Suite 400

Coral Gables, Florida 33134

Master +1(917) 421.9890

          contact@mellig.us

Business Advisory

LEGAL DISCLAIMER

MELLIG GROUP, LLC. 

It is a registered investment adviser (RIA) in the states of Texas, Florida & Arizona. Information presented in this web page is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and tax professional before implementing any strategy discussed herein. This site is designed for U.S. residents only. The services offered within this site are available exclusively through our U.S. financial advisors. Mellig Group' U.S. financial advisors may only conduct business with residents of the states for which they are properly registered.

INTERACTIVE BROKERS / CHARLES SCHWAB
Are members of  NYSE - FINRA - SIPC and regulated by the US Securities and Exchange Commission and the Commodity Futures Trading Commission. Interactive Brokers and Charles Schwab does not endorse, nor recommend, independent financial advisors, including Mellig Group, LLC.

Interactive Brokers and Charles Schwab provides execution and clearing services to its clients.

Copyright © 2021 Mellig Group, LLC.  All Rights Reserved. - Legal Disclaimer

bottom of page