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Goldman Previews Q2 Earnings Season

Look, here’s the thing: Goldman has got something they need to get off their chest with regard to upcoming earnings results.

Normally, the bank’s “US Weekly Kickstart” notes are about “conversations they’re having with clients,” but this week’s iteration reads a bit more like “our projections for Q2 reporting season.”

What’s amusing about the bank’s Q2 earnings preview is that the themes are so self-evident/obvious to anyone who hasn’t been asleep for the entire quarter that there’s something disconcerting about the fact that this is what the bank is sending to institutional clients.

That is, read everything excerpted below and then try to imagine being an institutional investor and not already knowing all of it. If any of it surprises you, you probably shouldn’t even be allowed near your own money, let alone anyone else’s.

But, it’s Sunday and everyone likes a good earnings season preview. I’ll print it on the off chance anyone can extract some value from it.

Via Goldman

The S&P 500 2Q earnings season begins in earnest next week. C, JPM, WFC, and PNC will report second quarter results on Friday, July 14. 89% of S&P 500 market cap will report earnings by August 4 (see Exhibit 1).

Consensus expects 2Q adjusted EPS will grow by 7% year/year, driven primarily by a 370% rebound in Energy EPS. S&P 500 EPS growth is expected to slow from 14% in 1Q, the fastest pace of growth since 2011. Excluding Energy, consensus forecasts earnings will grow by 4% in 2Q compared with 10% last quarter (see Exhibit 2). Info Tech (+10%) and Financials (+6%), the two largest contributors to S&P 500 earnings, are expected to deliver the fastest EPS growth this quarter outside of Energy.

S&P 500 sales are forecast to grow by 7% year/year in 2Q, while margins are expected to remain flat at 9.5%. Sales growth will likely be led by Energy (+26%) and Information Technology (+12%). Two sectors, Materials and Telecom Services, are forecast...