3 key risk factors to worry about this earnings season

The second-quarter earnings season will start in earnest on Friday with the first reports from big U.S. banks and investors are expecting the overall numbers to be strong.

The FactSet blended year-over-year per-share earnings growth rate estimate for the S&P 500, which combines results for those companies that have reported (companies with a fiscal quarter that ended in May) with those still to come, stood at 20.0% on Wednesday, above the 18.8% growth shown in the first quarter.

The blended growth rate for sales stood at 8.4%, compared with the 7.8% rate posted for the first quarter.

But against a backdrop of trade war concerns, rising inflation, a stronger dollar and tensions with many of America’s closest allies, companies are likely to be cautious in offering guidance. The Trump Administration late Tuesday unveiled 10% tariffs on another $200 billion in Chinese goods. Beijing immediately promised retaliation and criticized the White House for displaying a “loss of reason.”

Without the trade war, everything was in place for capital spending to rise and pull up real yields and wages, according to TS Lombard analysts Steven Blitz and Andrea Cicione. “But trade ‘war’ has arrived, mostly raising uncertainty that, in turn, stifles capital spending by business and households,” they wrote in a recent note.

Richard Turnill, BlackRock’s global chief investment strategist, played down the risk posed by trade—at least for now, as MarketWatch’s Victor Reklaitis reported.

“What investors need to focus on is at what point do these continued trade tensions start to impact corporate confidence and consumer confidence in the economy?” Turnill said in a Bloomberg radio interview.

“We’ve seen some signs of that, with some CEOs coming out and talking about deferring investment — warning the administration against further tensions. Those signals, I think, would be more worrying and indicate this

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