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Every earnings season, pundits say that the upcoming round of company reports is the most important ever.
Well, anyone saying the same about this round, which starts tomorrow, isn't wrong.
This is the most critical earnings calendar of my 20-year career as a global economist and investor.
The earnings reports of the dot-com bubble and the Great Recession pale in comparison to what is on tap for the next few weeks. This same time last year, I would have said that the disconnect between the global economy and the global markets wasn't as great as some other historical periods.
I would highlight the challenges in Q1 1973, Q3 1987, Q3 1989, Q3 1990, Q1 2000, Q3 2007, Q4 2008, and Q2 2020. These quarterly earnings periods began in the shadow of great crises and uncertainty. Big macroeconomic obstacles combined with uncertain government policies.
But none of them had the staggering combination of so many challenging macroeconomic factors at a time that price/earnings (P/E) ratios are so high. So the award for the most challenging earnings season and a bellwether of perhaps the next four years goes to Q3 2021.
So, let's take a closer look at what's happening right now, and I'll show you the best way to prepare for it all...
Q3 2021 Challenges
First off, we have a supply chain that continues to experience unprecedented transit delays with no sign of relief anytime soon, especially with the upcoming holiday season.
While it's already been 18 months since the pandemic started, COVID-19 cases and new variants continue to surge in pockets around the globe and threaten economic development. The United States and China are fighting, and war drums thunder over the Strait of Taiwan. And that's just the beginning of a massive fracturing between China and the West.
Then, there's oil.
Oil prices just hit a six-year high. According to JPMorgan Chase, they could go as high as $200 per barrel. That surge would be on the heels of all-time highs for coal, natural gas, liquefied natural gas, and other forms of energy needed to power manufacturing and the global supply chain. Heck, the entire nation of Lebanon experienced a blackout and lack of heat the other day.
For us in the States, it's not like we can rely on Washington for any help. Congress can't even agree on what color to use to print the Infrastructure Bill, let alone on the size and plan for deploying capital desperately needed for roads, bridges, and other critical assets.
Inflation continues to surge, despite the Federal Reserve's reassurances that such an impact would be "transitory." Add on the fact that the Fed is set to taper bond purchases when the market is already forcing the 10-year Treasury bond to its highest levels since before the crisis, causing even a professional economist like me to experience whiplash.
Earnings Ratios at Near Historic Highs
Do all these combined, negative factors justify the CAPE Shiller Ratio - the average P/E ratio of S&P 500 companies - hitting levels we haven't seen since 2002?
Not at all.
We've already seen multiple companies beat earnings expectations yet issue very concerning forward guidance estimates and warnings about the shortage of commodities and flailing supply chains.
For example, in recent months, McCormick & Co. (NYSE: MKC), the spice company that buys by the pound and sells by the ounce, has struggled to get shipments into stores and restaurants. And that's before the supply chain crunch hits its worst.
Nike has experienced a doubling in lead times from its shipments from Asia to the United States, while the average cost of a shipping container has increased seven-fold since before the start of the COVID-19 crisis. Costco Wholesale Corp. (NASDAQ: COST) is now renting its own vessels in 2022 to ensure delivery for the year, and even its executives admit the company faces shortages.
If you're worried about this earnings season, and you should be, it's time to learn about a brand-new secret that'll give you an edge over the rest of the market...
The Fade: Learn It, Know It, Live It
There's only one trade you need to learn this earnings season.
It's called "The Fade."
This occurs shortly after we see a big pop in premarket action on a stock on the morning or day after they reported quarterly numbers. During premarket, institutions and smart money investors bid up shares.
And right when the market opens, retail investors rush in to buy the stock on good news.
But all too often, we see something incredible happen not long after the retail investors rush in.
The stock suddenly reverses course and starts to fall, shedding percentage points in a matter of minutes or hours. This means the funds are taking profits and leaving new investors holding the bag.
And there's one person who can pinpoint the exact time that this fade starts.
He uses a unique tool called the Volume Weighted Average Price (VWAP) alongside his proprietary buy and sell signal. I've never seen anything like it, folks. The VWAP is legitimately the algorithmic EKG of the stock market.
In fact, hedge funds have used it for decades to exploit every investor in this market.
But tomorrow morning, for the first time ever, Kenny Glick is revealing all the knowledge you need to avoid being a sucker in this market. He's called the "Godfather of Day Trading" for a reason.
So, if you own a long-term portfolio of stocks reporting earnings this quarter, or you're a fast-paced trader looking for potential 20% or even 50% moves on just stocks alone in a day or less, then you need to join his live event tomorrow at 9:30 a.m. ET.
This will be the most widely attended event in Money Map Press history, and I'll be helping to answer your questions and show you the real power behind the VWAP.
You do not want to miss this event. And if you want to learn how to trade it before the event, be sure to join us bright and early tomorrow morning at 8:30 a.m. ET for Money Morning LIVE! right here.
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.