Prepare for terrible business profits

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Revenues have probably decreased in the first three months of the year. But investors have far exceeded that. The Dow is up 13% so far in 2019 and is not far from its record level. The S & P 500 jumped by 15% while the Nasdaq exploded by nearly 20%.

The market expects earnings growth to return to nearly 10% by the fourth quarter. Investors will need to pay close attention to what CEOs are saying about the rest of 2019 in their calls for results.

"Unless the results of this quarter are much worse than consensus, what matters most is the forecast," said Cliff Corso, executive chairman of Insight North America.

Corso believes that profits for the whole year could increase by around 5% thanks to the vigor of the second half of the year. This is not fantastic, but it may be enough to keep the market coming back – at a less explosive pace than in previous years.

"This year's profits are probably not a recipe for a return to the blockbusters market, but there is no viable alternative for investors."

Market assessments: Not too hot. Not too cold. Just right?

Jay Hatfield, portfolio manager and founder of InfraCap investment firm, is expected to continue to ease fears over an impending recession.

Hatfield believes that equities are always reasonably priced, if not necessarily cheap. The S & P 500 is currently trading at around 17 times earnings expectations for this year. It's roughly in line with its historical average.

"There are no overheated and implosive sectors at the moment.The market is not a screaming purchase but it's not overvalued either.There are still some good business, "said Hatfield, adding that he thought banks and energy stocks were particularly attractive.

Investors should look to areas that could benefit from continued economic expansion in the US, said Dec Mullarkey, chief investment officer, Sun Life Investment Management. This is not the time to get nervous and defensive.

"It's always a good idea to be optimistic and exposed to growth – people will be rewarded for keeping their actions now," Mullarkey said.

2. Bank Banking: JPMorgan Chase and Wells Fargo Announce Results Friday. In his annual report, JPMorgan Chase chief executive officer Jamie Dimon recently told investors that the bank's profits had been boosted strongly by corporate tax cuts.

Dimon may be talking more about this, as well as his recent criticism of President Donald Trump's last two picks for vacancies on the Federal Reserve, in calls with reporters and analysts.
As for Wells Fargo, expect questions about the search for a new CEO by the scandal-ridden company now that Tim Sloan has resigned.

Investors are hoping for signs that profits from both banks will improve later this year. The turnover is expected to remain stable at JPMorgan Chase in the first quarter and down at Wells Fargo. There is concern about the impact of low interest rates on their businesses.

3. Delta flies high: The airline giant is already predicting that first-quarter profits will be better than expected thanks to higher fuel costs at a slower pace than expected.
Delta will release its official results on Wednesday. The title is a favorite choice of investment legend Warren Buffett. And Delta withstood better than other American companies because it does not have a Boeing 737 Max in its fleet.

4. The ECB and the Fed in Focus: The European Central Bank will announce its latest decision on interest rates on Wednesday morning.

No change is likely, but wait for ECB President Mario Draghi to say more about the bank's plans to delay rate hikes as well as its new, cheap loan program for banks. Draghi could also address the recent weakness of economic data in Germany and Italy.
Later on Wednesday, the Fed will release the minutes of its March meeting. The Fed kept its rates unchanged, lowered its economic forecasts and indicated that no further rate hike would occur this year. Investors will look for clues as to whether some members think the Fed should cut rates – what President Trump and his choice on the board, Stephen Moore, have been calling for recently.
5. When you want a shooting star (and Star Wars): Disney will host an investor day on Thursday. According to the media giant, the event will focus on its ongoing media projects, including its upcoming Disney + service.

Investors can also ask about the integration of Fox's assets that House Mouse has just acquired, as well as the succession plans of CEO Bob Iger, whose contract expires in 2021.

Disney could reveal more information about Star Wars one day after the investor event. Episode IX director J.J. Abrams will speak at the celebration of the Star Wars in Chicago on Friday, which could lead to rumors that a trailer and a film title might fall.

6. Coming this week:

On Monday – Factory orders in the United States in February

Tuesday – report on JOLTS job openings in the United States in February; IMF World Economic Outlook

Wednesday – Delta Airlines (DAL), LVMH (LVMHF) and Bath & Beyond Bed (BBBY) earnings; Consumer prices in March in the United States; Powered minutes; ECB rate decision; UK GDP and European Brexit Summit; Senate holds hearing on "technology censorship"
Thursday – Rite Aid (RAD) earnings; Disney (DIS) investor day; Elections start in India
Friday – JPMorgan Chase (JPM) and Wells Fargo (WFC) earnings; China's export data, Britain's current deadline for leaving the European Union

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