Bring the Quarterly Results In

Weekly Update (July 16^th – 20^th)

Macroeconomic Outlook

Among all the uncertain variables that have been defining the markets, which are protectionism, oil and politics, I would like to focus on oil.

• In the last days, oil prices have fallen 5%
  • This has had really good repercussions, both in the micro and macroeconomy
    • From the macro view
      • The July CIP will not be under pressure that much and we will see whether it approaches the 2% target by Central banks
    • From the micro view
      • Lower energy costs will represent an increase in the profit per share
    • Therefore, these three variables have lost intensity and the immediate conclusion is that it is positive for the markets. In the short term

In the short term, two new variables surge,

• On one hand, quarterly results
  • Throughout this week more quarterly results of 72 companies will be released in the USA and corporate results are expected to increase by 21%
  • At the same time, in 2019 and 2020, the growth figures are around 10%
    • In the end, indexes replicate the increase of corporate results
  • Regarding Europe, growth will be more modest
    • 2018 – 9%
    • 2019 / 2019 – 8%
      • In general, corporate results will sustain growth
    • On the other hand, employment volume is expected to decrease a little until the 15^th of August
      • After that date, the bullish path will be resumed
    • As a conclusion, these two variables will influence the markets in a positive way

Moving to this week, there are no relevant macroeconomic indicators that will influence the markets too much. Nevertheless, even though they are forecasted to be weak, they are still better than the previous ones.