Tariff tantrums today and for the last few days. My guess is still that it will end up with a ‘big deal’, so beloved of Trump. But its also clear that we’ll have to put up with a huge amount of pain along the journey to get there.

In the meantime, I stick with my view that markets might ‘melt-up’ from here with one last hurrah, maybe over the summer or maybe in H2. My core reason for (muted) optimism is that I don’t see any obvious economic headwinds – though geopolitics could easily cause mayhem. One key bit of evidence – if we can call these slightly dodgy numbers evidence – is that earnings momentum looks to be holding up. Charles Stanley has something called an Earnings Tracker which looks at reported earnings from major markets across the globe and compares them with analysts’ expectations. It covers the S&P 500, FTSE 100, FTSE 350 and the Topix and also contains forward-looking earnings forecasts. The latest numbers seem fairly decent, all things considered. I’ve also pasted in the sectoral mix for the S&P 500. The stand out sector for me – healthcare.

The key findings include:

• In the US and Europe, the Q1 earnings season is drawing to a close with 85% of S&P500 constituents having reported earnings while 42% of Stoxx 600 and 52% of Eurozone stocks on the Euro Stoxx index having reported.  In Japan, 35% have reported Q4 19 results. There was a significant derating of earnings estimates for the S&P500 over the course of Q1 with consensus estimates falling from 5.3% at the start of the year to outright negative growth of -2.0% by April. However, results have been slightly better-than-expected and consensus earnings estimates are being upgraded over the reporting season in response to the more positive announcements.  In the US, 77% of those that have reported have beaten earnings estimates by 6%.  Earnings are up 2% at the index level on the same period last year, beating current consensus expectations for Q1 for the index. While earnings growth is much lower than in previous quarters, it is still positive and analysts’ estimates show an expectation for earnings to improve in the second half of the year.
• S&P500 companies have so far reported top-line growth of 6% on the same period last year with 58% beating sales estimates.
• After reporting extraordinary sales and earnings growth in previous quarters, the Energy sector has become one of the worst performing sectors reporting flat or negative growth in Q1 earnings in the US, Eurozone and UK.
• In Europe, 42% of Stoxx 600 companies have reported Q1 earnings. Of these, 55% have beaten earnings estimates, which is well above the long term trend (since 2011) of 50% in a typical quarter, while reported earnings are 5% above estimates.
• The Stoxx 600 is recording earnings growth of 2% on the same period last year with seven out eleven sectors reporting positive growth. Sales are up only 2%, which may be due to the slowdown in economic and export activity in the region over Q1, which is weighing on sales growth.
• In Japan, beats are much weaker than in the US and Europe. Only 42% of companies on the Topix are beating earnings estimates and 44% are beating sales estimates. However, the Topix is just about printing positive growth of 1% in earnings for the fourth quarter while sales are up 2%