Top News
S&P 500 earnings set to plunge as the coronavirus batters all sectors — with Wall Street counting on a bounce that may not come
The one certainty about the outlook for companies in a COVID-19 world is that second-quarter earnings will be very bad — the worst, in fact, in more than 10 years.
Although Wall Street is betting that earnings will start bouncing off the bottom in the third quarter, the beginning point for that bounce is unknown, and early indications suggest the rebound’s magnitude may not match investors’ hopes.
As usual ahead of earnings season, since the reports cover the three-month period that has already passed, what companies say about the current quarter or the full year is more important than the results they’re reporting. But this earnings season may be different, as uncertainty over the impact of the COVID-19 pandemic has led many companies to withdraw guidance, leaving analysts more blinkered than usual when setting estimates.
About a third of S&P 500
SPX,
component companies have pulled their financial guidance, and less than half the typical number of companies have so far provided quarterly updates ahead of earnings, according to Sebastien Leburn, senior portfolio manager at Boston Private. “There’s a deficit of information that needs to be filled at some point,” Leburn said in an interview with MarketWatch.
That puts the trajectory of the anticipated earnings bounce, which stock investors are banking on, on unsure footing.
“That’s why I think earnings will be very important, because they’ll provide a dose of reality,” Brad Cornell, professor emeritus of finance at UCLA, told MarketWatch. “They are going to tell us exactly whether a company is on a path that justifies this run-up.”
One aspect of the rally in stocks over the past few months is that it has been driven by a shrinking set of mega-capitalization companies expected to benefit in a post–COVID-19 world. All five of the most highly valued companies in the S&P 500 index — Apple Inc.
AAPL,
Microsoft Corp.
MSFT,
Amazon.com Inc.
AMZN,
Google parent Alphabet Inc.
GOOGL,
GOOGL,
and Facebook Inc.
FB,
— have rallied by a double-digit percentage in 2020, while the S&P 500 has lost 2.6%.
“
‘That’s why I think earnings will be very important, because they’ll provide a dose of reality. They are going to tell us exactly whether a company is on a path that justifies this run-up.”
”
Those five companies have a combined weighting of nearly 23% in the index, according to FactSet. That increases the risk for the broader stock market, as it heightens the importance of the earnings performance of a smaller set of companies. Disappointing results from other companies viewed as post–COVID-19 winners could also sap the market’s strength.
It’s not just the results that matter; so will any financial guidance they can provide to help justify the stocks’ gains.
“It’s all about clarity and having some guidance,” said Boston Private’s Leburn. “Without that, you have nothing to work with.”
The bad news is the actual numbers
The second-quarter earnings reporting season for S&P 500 companies unofficially kicks off before Tuesday’s opening bell, when a number of banks reveal their results.
Don’t miss:What to expect as banks report earnings: more loan pain but plenty of fee income
The aggregate blended year-over-year growth estimate for earnings per share, which includes some earnings already reported and the average analyst estimates of coming results, is negative 44.7%, according to FactSet. That would be the biggest decline in earnings since the fourth quarter of 2008, when earnings fell 70% in the midst of the financial crisis. It would follow 1% earnings growth in the first quarter.
“Second-quarter earnings will likely be a ‘kitchen sink’ report from many companies,” said Marc Lichtenfeld, chief income strategist with the investment and business newsletter publisher the Oxford Club. “They can throw in all of their write-offs and other expenses and know they will likely be forgiven for an earnings miss due to the extenuating circumstances.”
The current estimate marks a sharp drop in expectations as the coronavirus pandemic took firmer hold: The estimate as of March 31 was for a decline of just 11.1%.
All 11 S&P 500 sectors are expected to suffer negative earnings growth, led by energy, where earnings are projected to have fallen 151.5%, and consumer discretionary, which includes Amazon, where a 118% decline is forecast.
Information technology, which includes Apple and Microsoft, is expected to show a 9.5% earnings decline, while communications services, which houses Alphabet and Facebook, is expected to fall 30.7%. The best performer is currently estimated to be the utilities sector, whose earnings are forecast to be down 3.3%.
The outlook for sales is much better, with analyst expectations pointing to an 11% decline overall, with health care and utilities are the two sectors projected to see year-over-year sales growth.
The outlook for the third quarter is also bleak, just not as bleak as the second quarter.
The blended earnings-per-share estimate is for a drop of 24.4%, which compares with expectations of a decline of just 1% as of March 31. That would mark a second straight quarter of negative earnings growth, which by definition would mark the kickoff of an earnings recession.
That implies a bounce that recovers less that half the earnings lost since the first quarter. In comparison, the S&P 500 has retraced about 81% of the COVID-19 selloff from the Feb. 19 record-high close of 3,386.15 to the March 23 closing low of 2,237.40.
Of the 11 S&P 500 sectors, 10 are currently projected to suffer negative third-quarter earnings growth, led by energy at down 113.7% and industrials at down 59.8%. The one sector expected to grow earnings is utilities, where a 0.3% earnings rise is foreseen.
Meanwhile, third-quarter sales are expected to decline at a 5.5% rate.
Winners and losers in a new world
Although the earnings outlook for the overall S&P 500 is uniformly negative, investors have made a clear distinction between companies expected to end up as winners in a post–COVID-19 world and those that will struggle.
Many believe the COVID crisis is creating a new world, while others believe the pandemic has just sped up the future.
“Historically speaking, crises have tended to accelerate macro trends already in place,” said Yancey Spruill, chief executive officer at DigitalOcean, a cloud infrastructure company. “The clear winners are enterprise technology companies whose infrastructure or software supports the shift to remote work environments and deliver services to customers in a low-friction manner through an internet-based interface.”
In this world, Spruill views Okta Inc.
OKTA,
Atlassian Corp.
TEAM,
Twilio Inc.
TWLO,
and ServiceNow Inc.
NOW,
as cloud productivity tools that will likely continue to see “impressive growth.”
“Coronavirus has split the stock market like never before,” said David Russell, vice president of market intelligence at TradeStation Group. “Large swaths of the S&P 500 and even some members of the Dow Jones Industrial Average
DJIA,
have become irrelevant as newer software companies break out.”
A good example is Zoom Video Communications Inc.
ZM,
Russell said. The video meetings service, which went public just 15 months ago, has a market capitalization of about $78 billion, which is bigger than the market caps of two hotel stocks in the S&P 500 — Marriott International Inc.
MAR,
and Hilton Worldwide Holdings Inc.
HLT,
— combined, and bigger than the market caps of six Dow components, including Goldman Sachs Group Inc.
GS,
and Caterpillar Inc.
CAT,
Investors also seem to be betting on socially conscious companies following environmental, social and governance, or ESG, criteria.
“We were already seeing a shift of money into ESG funds before coronavirus, and the trend has continued with an embrace of electric vehicles and solar energy,” Russell said.
Opinion:Coronavirus can shake up ESG investing — here’s what investors should demand
For example, Tesla Inc.
TSLA,
is not yet a member of the S&P 500, but with the stock more than tripling this year, the electric-vehicle maker’s market cap of about $276 billion makes it the 15th most valuable company in the U.S.
COVID trumps political unknowns
One potential headwind for the stock market is the cloud of uncertainty blanketing the political landscape, in terms of what shape the next stimulus package, if one emerges, will take in the shorter term, and the Nov. 3 presidential election in the medium and longer terms.
See:Goodbye, extra $600: Unemployment benefits won’t exceed former wages in next stimulus bill, Treasury’s Mnuchin says
“Politics will undoubtedly play a role in the outlook and guidance for Q3,” said Ken Van Leeuwen, managing director and founder of the financial adviser Van Leeuwen & Co. “The current news cycle has been dominated by COVID-19–related [developments] and social unrest, but we feel that the election will be in the spotlight as we get closer to November.”
This could make it difficult for companies to provide investors with the clarity they’re desiring. And a continued reluctance to provide guidance could shake the stock market’s foundation.
“The continued information deficit can’t get stocks in trouble,” said Boston Private’s Leburn.
Others believe that politics is just a sideshow that can create short-term volatility for stocks, while lasting impacts are unlikely. Especially in the current environment.
“[T]he tremendous health and economic challenges associated with the COVID-19 outbreak mean that election-related political uncertainty isn’t the primary concern of business leaders,” said Mark Hamrick, senior economic analyst at Bankrate. “They have other proverbial fish to fry at the moment.”
Cost cutting and capital raising
Investors can brace for a fresh round of cost cuts and capital-raising activity to accompany earnings reports, as companies move to bolster liquidity and preserve cash as revenue shrinks.
Companies in the hospitality sector — restaurants, hotels, airlines, and rental-car companies — are most at risk, said Anthony Denier, chief executive of Webull, a commission-free trading platform. “Companies related to sports, such as Madison Square Garden Sports Corp.
MSGS,
will also take a hit. Entertainment companies like casinos and anything that puts on shows where large groups of people attend will also be hit hard.”
The handful of companies that have already reported or updated guidance reflect the trend.
Walgreens Boots Alliance Inc.
WBA,
announced it plans to cut 4,000 jobs in the U.K., and United Airlines may furlough or fire up to 36,000 employees once the federal rules for accepting pandemic money expires on Oct. 1.
“This could expand throughout the entire airline sector,” said Denier. “AT&T also said it may cut jobs and close stores. Again, this might be a harbinger for the rest of the telecommunications industry.”
“
‘There’s so much liquidity and capital to put to work and so much trading on short-term trends and issues. It belies the underlying weakness and problems to come and it’s whitewashing many of those problems.’
”
Other companies to shrink head count include jeans maker Levi Strauss & Co.
LEVI,
audience-measurement company Nielsen Holdings PLC
NLSN,
motorbike maker Harley Davidson Inc.
HOG,
and hamburger chain Shake Shack Inc.
SHAK,
which has failed to fully offset restaurant closures with delivery and pickup.
James Gellert, CEO of Rapid Ratings, a data and analytics company that assesses the financial health of private and public companies, said the quarter will reveal just how much companies have been destabilized by the pandemic — and it won’t be pretty.
Rapid Ratings conducted stress tests on 40,000 public and private companies, reviewing their financial health ratings prior to their first-quarter earnings releases to establish a true pre–COVID-19 perspective and measure how much they deteriorated after stay-at-home orders were put in place.
The stress tests showed deterioration in core health, which looks at longer-term stability, while shorter-term financial health ratings were not as badly impacted, “but I suspect after the second quarter we will see a precipitous decline in both,” said Gellert.
Overall, companies increased leverage, while revenue and profitability declined. That means higher interest costs but lower interest coverage amid a reduction in cash from operations.
“That combination of factors sets the stage for an enormously impactful second quarter,” he said.
Even after raising money at record rates, companies are expected to continue to issue debt, equity and convertible bonds in the coming quarters, as long as capital markets remain open.
U.S. companies issued a stunning $1.09 trillion of corporate bonds in 909 deals in the year through July 10, according to data provided by Dealogic. That shattered the previous record of $670.7 billion in 664 deals issued in 2015.
Companies issued $252.2 billion of equity in 659 deals, the Dealogic data show, trouncing the previous record of $206.1 billion in 599 deals issued in 2000.
Convertible bond issuance also set a record, of $180.4 billion in 543 deals, breaking the previous mark of $185.9 billion in 550 deals set in 2000.
“There’s so much liquidity and capital to put to work and so much trading on short-term trends and issues,” said Gellert. “It belies the underlying weakness and problems to come, and it’s whitewashing many of those problems.”
Crucially, buoyant capital markets are not reflecting the underlying weakness to come and the problem of long-term destabilization. “Nobody should equate strength in the S&P 500 with underlying corporate strength,” Gellert said.
Acrylic nails are a popular choice for those looking to add length, strength, and style to their natural nails. Whether you’re new to the world of acrylics or a seasoned nail enthusiast, there are always questions that arise about the application, maintenance, and overall care of these enhancements. This guide will answer all your acrylic nail questions to ensure your next manicure is a complete success.
What Are Acrylic Nails?
Acrylic nails are artificial nail enhancements made from a mixture of liquid monomer and powder polymer. When combined, they form a hard protective layer that can be molded into various shapes and lengths. Once hardened, they provide a durable and long-lasting canvas for nail polish, art, or simply a natural look. For more in-depth information, check out Acrylic Nail FAQs to get all the details you need before your next salon visit.
How Are Acrylic Nails Applied?
The application process of acrylic nails begins with the preparation of your natural nails. The nail technician will clean your nails, file them down, and apply a bonding agent to help the acrylic adhere. The acrylic mixture is then applied in thin layers, sculpted to the desired shape, and allowed to dry. Once set, the nails are filed, shaped, and buffed to a smooth finish.
Acrylic nails can be customized in terms of length and shape, making them a versatile choice for anyone looking to enhance their look.
How Long Do Acrylic Nails Last?
Typically, acrylic nails can last anywhere from two to three weeks before requiring a fill. During a fill, the nail technician will replace any grown-out acrylic and maintain the structure of the nails. With proper care, acrylic nails can be worn for extended periods, but it’s essential to give your natural nails a break occasionally to maintain nail health.
How Do You Care for Acrylic Nails?
Caring for acrylic nails is crucial to ensuring they last as long as possible and that your natural nails remain healthy underneath. Here are some essential tips:
- Avoid excessive water exposure: Prolonged exposure to water can weaken acrylic nails, making them prone to lifting or damage. When washing dishes or cleaning, consider wearing gloves to protect your nails.
- Moisturize cuticles regularly: The acrylic application process can sometimes dry out your cuticles. Regularly apply cuticle oil to keep your cuticles hydrated and prevent hangnails.
- Be gentle with your nails: Acrylics can be strong, but they’re not indestructible. Avoid using your nails as tools to open packages or scrape things, as this can lead to breakage.
- Schedule regular fills: As your natural nails grow, gaps will appear between the acrylic and your cuticles. Regular fills ensure your nails maintain a smooth, polished look and help prevent lifting.
How Do You Remove Acrylic Nails Safely?
Proper removal is crucial to avoid damaging your natural nails. It’s highly recommended to have acrylics removed by a professional at the salon. However, if you prefer to remove them at home, follow these steps:
- Soak in acetone: Start by soaking a cotton ball in acetone, then place it on each nail. Wrap your fingers in aluminum foil and allow the acetone to work for about 20 minutes.
- Gently scrape off the acrylic: After soaking, use a cuticle pusher or an orange stick to gently scrape off the softened acrylic. Be patient and avoid forcing the acrylic off, as this can damage your natural nails.
- Buff and moisturize: Once the acrylic is completely removed, buff your natural nails to smooth out any rough spots and apply cuticle oil to restore moisture.
Are Acrylic Nails Safe for Your Natural Nails?
When applied and removed properly, acrylic nails should not cause significant damage to your natural nails. However, improper removal or overuse without giving your nails time to breathe can lead to thinning, weakening, or breakage of your natural nails.
If you plan on wearing acrylic nails long-term, it’s a good idea to take breaks between applications and ensure you’re nourishing your nails with oils and treatments.
What Are the Best Acrylic Nail Shapes?
Choosing the right nail shape is essential for creating a look that complements your hands. Some of the most popular acrylic nail shapes include:
– Square: A straight-edged, classic look perfect for shorter nails.
– Oval: A soft, rounded shape that elongates the fingers.
– Coffin: Also known as ballerina shape, this trendy look features a tapered edge with a flat tip.
– Stiletto: A dramatic, pointy shape ideal for those who want a bold statement.
Each shape offers a unique aesthetic and can be tailored to suit your personal style.
Are There Any Alternatives to Acrylic Nails?
If you’re looking for a different type of nail enhancement, consider these alternatives:
– Gel nails: Gel nails offer a glossy finish and are cured under UV or LED light. They’re less rigid than acrylics and can feel more natural.
– Dip powder: This method involves dipping the nails into a colored powder and sealing them with a clear coat. It provides a similar look to acrylics but is generally less damaging to the natural nails.
Conclusion
Acrylic nails are a versatile and durable option for achieving customized, beautiful nails. By understanding the application process, knowing how to care for them, and safely removing them, you can enjoy long-lasting manicures that enhance your style. With the ability to choose from a variety of shapes and designs, acrylic nails offer endless possibilities for self-expression. Remember to take care of your natural nails in between applications to keep them healthy and strong. Whether you’re a first-time user or a seasoned pro, acrylic nails can be a fantastic way to express your personality and keep your nails looking flawless for weeks.
When sanctions were imposed on Russia for its war against Ukraine, their objectives were twofold: to reduce Russian military capacity by limiting modern weapons and to lower Russian revenue streams. While in the beginning, the sanctions indeed weakened the Russian economy, they have fallen short of their initial objectives – mostly because Russia has found ways to circumvent many of them. The Kremlin has exploited international corruption, relied on foreign third parties, and utilized loopholes in trade restrictions. One such individual who allegedly provides services to Russian-linked companies is Jacqueline Troost Omvlee, a Geneva-based Dutch citizen.
Jacqueline Troost Omvlee is married to Niels Troost, an oil trader sanctioned by the United Kingdom. He and his company, Paramount Energy & Commodities SA, are among the 50 individuals and organizations blacklisted in response to the business connections with Russia. His wife, Jacqueline, helps to facilitate financial transactions for Niles Troost and Russian oligarchs including Gennady Timchenko, a Russian billionaire oil trader and Putin`s close associate.
Gennady Timchenko and his family have been sanctioned in many countries for backing the Kremlin’s war machine. However, with the help of Jacqueline Troost Omvlee, he seems to find ways to evade sanctions and continue his financial operations. In these illegal schemes, individuals like Jacqueline often serve as a front person for sanctioned oligarchs and their business assets. Russian-linked companies set up subsidiaries around the world, often registering new entities in offshore havens or countries where regulations are relatively lax or non-existent. To obfuscate the arrangements, the daughter companies spawn offspring in the form of subsidiaries, as the chain of concealment stretches on and on. The result is like a giant Matryoshka doll.
Jacqueline’s involvement in financial transactions that potentially support Timchenko’s interests raises significant concerns about the efficacy of Western sanctions. The fact that Jacqueline Troost Omvlee continues to operate without facing sanctions herself highlights a significant loophole in the enforcement mechanism. Various shady schemes and tactics designed to circumvent sanctions often hide the activity of individuals such as Jacqueline, making it difficult for authorities to detect and punish them for their involvement.
Jacqueline Troost Omvlee’s role in her husband’s financial dealings as well as her alleged ties to Russian business schemes, emphasizes the need for stronger international sanctions. Her actions not only aid in sanctions evasion but also diminish the overall effectiveness of the measures designed to isolate and pressure those supporting the Russian regime. Therefore, sanctioning Jacqueline Troost Omvlee is not only a matter of addressing her individual actions but also a necessary step to reinforce the credibility and effectiveness of the sanctions regime. By targeting individuals who play a key role in evading sanctions, authorities can send a strong message that efforts to undermine international sanctions will not go unpunished. This measure is crucial for maintaining the integrity of the sanctions system and ensuring that it achieves its intended goal of isolating and restraining those who support destabilizing activities.
European countries and the US need to expand their sanctions-tracking and investigative actions to improve the monitoring of sanctions compliance and to introduce new measures against systematic violators of law. The sanctioning states have the resources and capacity for this, and need to take action now.
Ensuring a long and healthy life for your Hermann’s Tortoise requires a combination of proper care, nutrition, and habitat management. Hermann’s Tortoises, known for their charming personalities and distinctive shells, can live for several decades with the right conditions. Understanding their needs and providing a suitable environment is key to helping them thrive. Here’s how you can support your Hermann’s Tortoise in living a long, happy life.
Creating an Optimal Habitat
One of the most critical factors in promoting the longevity of your Hermann’s Tortoise is the creation of a suitable habitat. Providing an environment that mimics their natural surroundings is essential for their overall health. An appropriate habitat helps prevent stress and supports their well-being. For detailed guidance on setting up an ideal habitat, including specific requirements for outdoor enclosures, visit this comprehensive guide on Habitat for Hermann’s Tortoise.
- Outdoor Enclosure: Hermann’s Tortoises thrive in outdoor enclosures that provide ample space to roam, bask, and forage. An outdoor setup should include a secure, predator-proof area with access to natural sunlight. Incorporate areas for basking and shade to allow the tortoise to regulate its body temperature. Additionally, include plants, rocks, and hiding spots to simulate their natural habitat and encourage natural behaviors.
- Indoor Habitat: If an outdoor enclosure is not feasible, an indoor habitat can also support a long lifespan if set up correctly. Use a large, well-ventilated enclosure with appropriate heating and UVB lighting. Provide a substrate that allows for burrowing and offer various hiding spots and enrichment items.
Diet and Nutrition
A balanced diet is vital for maintaining the health and longevity of your Hermann’s Tortoise. They are primarily herbivores, and their diet should reflect their natural feeding habits.
- Leafy Greens: Offer a variety of leafy greens such as kale, collard greens, and dandelion greens. These vegetables provide essential vitamins and minerals that support overall health.
- Vegetables and Fruits: Supplement their diet with other vegetables like carrots, squash, and bell peppers. Fruits should be given in moderation due to their high sugar content.
- Calcium and Supplements: Provide a calcium supplement to support shell and bone health. A cuttlebone or powdered calcium can be added to their food. Ensure that they also have access to fresh, clean water at all times.
Regular Health Checks
Routine health checks are essential for early detection of potential health issues. Regular veterinary visits help ensure your tortoise remains in optimal condition and addresses any health concerns promptly.
- Observation: Monitor your tortoise’s behavior and physical condition regularly. Changes in appetite, weight, or activity level can indicate health problems.
- Preventative Care: Schedule annual check-ups with a veterinarian experienced in reptile care. Regular exams help catch any issues early and keep vaccinations and other preventative treatments up to date.
Environmental Enrichment
Providing environmental enrichment helps keep your Hermann’s Tortoise mentally stimulated and active. Enrichment can reduce stress and prevent boredom, contributing to a better quality of life.
- Foraging Opportunities: Hide food items around the enclosure to encourage natural foraging behavior. This not only provides mental stimulation but also mimics their natural hunting practices.
- Variety: Change the layout of their enclosure periodically and introduce new objects or plants to keep their environment interesting and engaging.
Conclusion
By focusing on creating the right habitat, providing a balanced diet, ensuring regular health checks, and offering environmental enrichment, you can significantly enhance the lifespan and well-being of your Hermann’s Tortoise. For further details on creating an ideal habitat, including tips for designing an outdoor enclosure, refer to this helpful guide on Habitat for Hermann’s Tortoise. Implementing these practices will help ensure that your tortoise enjoys a long, healthy life.
-
World3 years ago
The Gabby Petito case. Brian Landry set up camp with his family after his girlfriend disappeared
-
Top News5 years agoTristan Thompson reacts to Khloé Kardashian’s new appearance
-
Top News5 years agoTLC ‘sMothered’ recap: ‘Party curled up,’ boyfriend problem
-
Top News5 years agoAlex Cooper hosts a solo podcast
-
Top News4 years ago2021 Ford Bronco price: Here’s how much the 2-door and 4-door cost
-
Economy2 years agoEverything has been delivered. 10 Bugatti Centodieci are already in the hands of the owners
-
Tech4 years agoFall Guys is supplying out a legendary costume and Kudos as an apology present
-
Top News5 years agoChiara de Blasio was ‘very cold’ during the arrest of the protest: witness