VIDEO: What We're Looking for With Busy Earnings Week Ahead

As we get ready for a big week of corporate earnings, with about 24% of the S&P 500 reporting, Chris Versace discusses how those reports lay the groundwork for an even more meaningful week of quarterly earnings reports next week. 

He also explains why we’ll be particularly interested in this week’s Flash April PMI data from S&P Global SPGI and the latest Fed Beige Book. Chris also shares why we could see some favorable trade deal progress this week, but cautions that details for final trade deals will be more important. 

Transcript

CHRIS VERSACE: Hey, folks, Chris Versace here, and it is Monday, April 21. We have a relatively full week ahead of us, with over 122, or roughly 24%, of the S&P 500 reporting over the next several days. Now, as you know, we've been thinking that there are multiple of factors that are poised to lead these companies to deliver June quarter, or perhaps even revised 2025 guidance, that will be, on the one hand, more conservative than some folks are thinking, or, as others might frame it, below consensus forecasts, perhaps even below the upper end of whisper number conversations as well.

Now as we think about this, as I mentioned, we've been waiting for this. And based on what we saw last week with UnitedHealth, DR Horton, and some others, we are going to remain in a defensive posture, letting our cash and our inverse ETFs continue to do their job. But we have to remember that as busy as it is this week for earnings, it's the following week that could very well matter much more.

Now I say this because next week, we will have earnings from Apple, Meta, Amazon, Microsoft. And on the one hand, you're going, wow, that's going to be a busy set of days for the portfolio. And it will be. But just those companies alone, they comprise about 19% of the S&P 500's weighting. Now that's pretty big. So it tells us that the impact of their earnings and their guidance will be meaningful on the overall market.

Now setting the stage for that this week, we do have quarterly results from Alphabet. And of course, we'll be digging into that, what it says about their key search business, what is going on with YouTube, Cloud, what are the margins there, what's the outlook for Cloud? Remember, they too have been capacity-constrained, but the management team recently talked about how they were going to continue with their, call it, very, very strong 2025 capital spending plan.

So we'll be parsing all those questions. We'll also be digesting management's comments about some new regulatory decisions, particularly on the advertising front. I suspect that they're going to tell us we will fight this, but again, we'll want to digest those comments in full so we can make an informed decision. Across the sea of 122 other companies reporting this week, we have some others in the portfolio, ServiceNow, United Rentals as well.

But that's only 3 out of 122 companies, which tells us there's going to be a lot of fresh data coming out there. And we will be consuming as much of it as we can so we can update our investment mosaic, not just for all of earnings season, but especially ahead of what we're likely to hear next week, when, again, those key companies that comprise about 19% of the S&P 500 report. I do think this week, next week is going to be very important for the markets.

So we will want you to be making sure that you digest our Alerts in a timely fashion. And you can expect that we will have a number of Alerts just given all that is going on. One of the other things that I want to talk about for the next couple of days that we'll be focusing on will be the Flash April PMI report that comes out Wednesday just after the market open. Now for long-time members, you know that we dig into this report every month. But for newer members, the reason that we like to dig into this Flash PMI data is it gives us our first hard look at the reported month's activities across the manufacturing and service sectors.

It gives us new order data. That's a leading indicator for what we're likely to see in the following month, but it also gives us a bunch of other data that is really going to frame what we will hear from reports in the next couple of weeks that go into some key decisions, whether it's GDP calculations, management and their thoughts on the economy and how that might affect their guidance, but also monetary policy. Now this time around with April, we have another reason to really pay attention to the flash data.

It's going to show us the initial impact of Trump's tariffs, the response by other companies, as well as the continued impact of previously announced DOGE cuts. So this is going to be a very big report for us, one that we dig even deeper into. I suspect other investors will do the same, economists and companies as well. And again, it's going to tell us how the domestic economy is doing at the start of the current quarter.

It's going to give us an indication as to what the month of May is likely to look like. And, again, we'll want to pay very closely to what the data tells us. Could it tell us that the economy is decelerating? It may. Could it tell us that the prospects for stagflation look even better? It may, but we're not going to make any predetermined judgments about this. Instead, we're going to do what we do, which is let the data talk to us. Now as I mentioned, that report comes out Wednesday morning just after the market open.

But later that day, we will get the latest iteration of the Fed Beige Book. This is an anecdotal collection of comments from the various Fed member banks. And, again, given the timing of it, it's very important for what it will tell us about the month of April and the initial impact of Trump's tariffs. So again, we will be digging deep into this report, probably deeper than usual, but it's also going to help us, along with the Flash data, prepare for comments from Fed speakers toward the back half of the week, specifically late Wednesday, Thursday, and Friday.

Remember that last week, Fed Chair Powell made some comments that were, I have to say, pretty much in line with what we were thinking, But it did irk some folks, especially President Trump. I suspect we'll see some continued back and forth on that front. Our view is that Fed Chair Powell is here to stay, serving at least through the end of his term, which will expire in the first half of 2026.

Again, I expect a lot of headlines, but I think that, despite the bluster that we're hearing from Trump, there are some calmer heads in the White House and across his advisors that understand what could happen to the market if Powell was quickly removed, especially, in my view, for reasons that are not related to cause. But we'll be paying very close attention to those Fed speakers that we get on Thursday and Friday, parsing their language, especially if the Fed Beige Book and the April Flash PMI data seem to suggest that the economy might be slipping more than people were thinking.

But again, we want to get the data first. No predetermined judgments. Let the data talk to us, and then match up the language used by the Fed speakers. Now there is one other item that we'll be watching out for, and that's going to be comments from President Trump about trade deals. I have to be honest, it's not lost on us that over the weekend, some polling data was released that shows Trump's approval rating pretty much at its lowest.

Call us cynical. Maybe we are, but we would not be surprised to see him come out with some positive comments on trade deals and their progress. Now we'll appreciate that, don't get me wrong, but we have to remember that it's inked deals and their impacts that will matter most when it comes to thinking about the evolving landscape ahead of us, what that means for the economy, what that means for companies, company guidance, company earnings, all of that.

So, yeah, we expect there might be some headline bluster, but we'll look through the bluster waiting for the inked deal. Again, that is what will matter most. Just a couple other programming items real quick. We will have Office Hours this afternoon between 4:00 PM and 5:00 PM in the forum. We will have another Stocks and Market podcast out on Wednesday. With that, we will be having Jay Woods from Freedom Capital, global macro strategist, great guy. I think you'll enjoy it.

We'll talk more about that during Office Hours today when I look to collect your questions for Jay. And then remember, too, that on Wednesday, I will be guest co-hosting Yahoo Finance's Catalyst Program, which you can stream at Yahoo Finance beginning at 10:00 AM. Again, that's Wednesday. We have a busy week. We're going to have much more coming your way, not only today, but throughout the week. So, folks, please remember, check your emails, check your Alerts. Thanks for watching.