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These are the themes to watch out for in the coming Earnings Season

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Today marks the official start of the fourth quarter earnings period. Virtually all listed companies around the globe will release their latest earnings reports over the next month. This is no surprise as the market tends to be more volatile over this period. Not just for the stock market; the trends that large companies see can have significant implications on the currency markets.

Already, analysts have calculated the future for many of these firms, particularly those with large capitalizations. This could help to move the currency markets. Some things could have a dramatic impact on the markets, while others could be expected to help.

Growth vs. inflation

One of the main themes of the last earnings season and could be repeated now is what could be called “ghost profits”. It is when a company reports an improvement in sales but lower volumes. The company makes less, even though nominal profitability is up.

That’s because when companies raise prices, their revenue goes up. But if it’s part of inflation, then the actual sales volume might go down. This means that their sales will not increase if inflation isn’t present.



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