With stocks touching all-time highs, Wall Street believes there’s a new rally in the making

Treasury yields are subdued, and futures are bouncing off their session lows.

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Good morning.

U.S. futures are slightly higher ahead of the release of the latest FOMC minutes. Elsewhere, bullish sentiment abounds. In an investor note this morning UBS CIO Mark Haefele says he sees further upside to the S&P 500 now that it’s topped 4,000. That backs up what Lindsey Bell at Ally Invest told CNBC yesterday: “There are lots of reasons to be excited about the months ahead.”

One reason for optimism is the upcoming earnings season, which kicks off next week. In today’s essay, I tell you what to look for.

But first, let’s see what else is moving markets.

Markets update






Earnings season: a preview

As CFOs sometimes lament, earnings season never really ends. And, sure enough, the big banks—JPMorgan Chase, Bank of America, Wells Fargo and Goldman Sachs—next week will deliver their Q1 reports, unofficially kicking off the latest round.

The theme of this upcoming season will be revisions, revisions, revisions. The good kind. According to John Butters, senior earnings analyst at FactSet, the next round of results will be stellar.

FactSet calculates an estimated Q1 earnings growth rate for the S&P at 23.3%. If that were to stand, it would be the best quarter for bottom-line growth since Q3, 2018 (a 26.1% rate).

BofA Securities is slightly more bullish (based on a tally of investment-grade S&P 500 firms). It sees year-on-year earnings growth for IG issuers hitting nearly 25% this quarter, and 45% next quarter.

The outlook is pretty rosy, too. According to FactSet, there are a record-number of S&P companies—60 in all—that have reported positive EPS and sales guidance for the current year, the highest number in 15 years. Tech companies lead the way.

Now, even if corporates deliver on their knock-out earnings promises, it won’t silence the earnings doves who continue to question sky-high valuations.

But a strong batch of corporate results could at least focus market chatter on company performance, and, mute—even if only temporarily—the narrative that the fate of stocks is ultimately tied to something that’s largely beyond companies’ control: turbulent bond yields.

And, the best thing about earnings season? Even if it disappoints, there’s another one right around the corner.


Bernhard Warner

As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.

Today’s reads

Mitch McConnell to Corporate America: butt out. If you think the C-Suite is verging a lot into politics these days, you’re not alone. And that brings us this gem, courtesy of Mitch McConnell: “My warning to corporate America is to stay out of politics,” the Senate Minority Leader declared on Tuesday. A moment later, he clarified: “I’m not talking about political contributions.” 💰💰💰

Paycom the man. In the ranks of the most richly rewarded CEOs in the S&P 500, there’s a new name. It’s Chad Richison, founder and chief exec at payroll processing firm Paycom. He hit the jackpot last year, awarded $211 million in total compensation as the share price has been on a tear.

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Market candy

The world’s craziest property market?

It could very well be down under—waaay down under, in New Zealand. Bloomberg has a great piece about how crazy-competitive it is to buy even a humble abode in one of the most beautiful places on Earth. According to Bloomberg, citing OECD data, New Zealand has fast become one of the most expensive property markets on the planet, which means prices go up nearly every time realtors put out word of an open-house event.