We’re almost into earnings season—that’s when companies report how they’re doing and how they think they’ll do after each quarter. There are few companies like Caterpillar reduced their predictions throughout the year. Others like Uber, He did better than expected and predict strong growth.
Airbnb said it expects its growth to slow in the third quarter. On its earnings call on Tuesday, Chief Financial Officer Ellie Mertz said people aren’t booking as much as they used to.
„We’re not seeing the same level of strength that we have in those big lead times,” Mertz said. „So two months later, what do you book for Thanksgiving and what do you book for Christmas?”
B. According to Naved Khan, managing director of Relay Securities, that means consumers’ travel dreams and wallets are gone.
„But there could be different reasons for that,” Khan said.
As inflation comes under control, people may not feel the need to lock in rates so far. Khan said online travel firm Booking Holdings has not let consumers slip away.
„The reservation is not talking about people moving from four-star to three-star in hotels,” Khan said.
If you look at all the second-quarter earnings reports from all corners of the economy, the overall picture is positive, said Joe Brusulas, chief economist at RSM.
„Eighty percent of companies beat expectations, and on average they beat it by 8-10%,” Brusulas said.
When companies report earnings, they also provide forecasts of how things will look over the next two quarters. It’s called guidance, said Ozung Kwan, U.S. equity strategist at Bank of America.
„The guidance was surprisingly strong, actually,” Kwan said. „I mean, it’s gone down a little bit, but it’s still very high, indicating that companies are still positive on their earnings calls.”
Almost 30% more companies made forecasts that were higher than analysts expected. Bank of America analyzed the tone of earnings calls to get a sense of the corporate.
At the same time, macroeconomic data shows the economy is cooling, said Scott Wren, senior global market strategist at Wells Fargo Investments.
„We’re going to have lower GDP, so I think the earnings growth we’re going to see is going to moderate some,” Wren said.
Moderation, not inflation. From corporate boardrooms, the economy will recover.
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