It's the most wonderful time of the year... Happy earnings season, as companies give the gift of their financial and strategy updates, starting with big banks (Wells Fargo and JPMorgan). But this season's different — Slowing global economies and shrinking impacts from 2017's US tax cut have investors worried about the first quarterly profit decline in two years.
2018. Good year. Maybe too good... The huge tax cut passed in December 2017 boosted 2018's profits for S&P 500 companies by 20%. Twenty-percent (that's crazy strong growth). Analysts aren't getting the same vibes for 2019. They predict first quarter profits will fall by 3.9% compared to last year.
Don't be shocked by profit shrinkage... Companies already showed their cards — Many CEOs have recently warned us through "guidance," a heads-up on what to expect. And 73% of guidance lately has been simple: Profits will be less than last year. Walgreens did it just last week, and its shares are down 14% since.