So far, the first-quarter earnings season is trying to follow the same script that the market has followed for years … but this time, things aren’t going according to plan, and a host of blue chips are gliding under the limbo pole as a result.
The usual plan: Early optimism gives way to dramatically lowered expectations, managed down by cautious corporate guidance and estimate cuts by analysts. But this lowered bar is then magically exceeded thanks to earnings manipulation (loan loss reserve releases by banks being the largest culprit), investors celebrate, and the cycle repeats.
But this time …
While two-thirds of S&P 500 companies that have reported earnings have beat expectations, more than half have missed revenue estimates. Sales is much, much harder measure for companies to tweak because of the way accounting law works. This is a sign that the overall economy is in a bit of a rough patch — something corroborated by a drop in the Citigroup Economic Surprise index (PDF) to a low not seen since mid-2012.
We’re also seeing a number of notable earnings disappointments in big-name blue chips.
Here are five that have fallen short: