To The Moon

As the U.S. corporate earnings season enters a period of intensive disclosures, the initial batch of results has begun to reveal the economic and political undercurrents affecting the annual growth prospects of American companies. Airlines were among the first to issue warning signals, with Delta Air Lines expressing caution on its profit outlook due to geopolitical uncertainties, and United Airlines warning that global tensions could suppress travel demand. Simultaneously, executives from consumer goods giants like Procter & Gamble and McCormick & Company indicated that consumers continue to maintain a cautious spending mindset. 3M saw its stock price suffer its largest single-day drop since last April after providing an earnings outlook that fell short of market expectations, with the manufacturer citing ongoing macroeconomic uncertainties in its consumer and automotive sectors. The disappointing earnings reports from industrial distributor Fastenal and logistics firm J.B. Hunt Transport Services further reflect the persistent pressure within the industrial sector. This pessimistic tone from corporate management stands in stark contrast to the positive trends shown by several core economic indicators, as last year's data indicated robust U.S. economic growth and resilient consumer spending. Statistics show that as of Thursday's market close, 80% of the S&P 500 index component companies that have reported earnings surpassed analyst expectations. Steve Sosnick, Chief Strategist at Interactive Brokers, commented that policy-level uncertainty "undoubtedly" overshadows positive corporate news, making planning exceptionally difficult for management teams, though few CEOs would explicitly state that White House policy turmoil is hampering their operations. The current wave of corporate earnings releases coincides with a rare convergence of political volatility and global environmental uncertainty. With the S&P 500 having achieved double-digit growth for three consecutive years and overall U.S. stock valuations at high levels, there is virtually no room for error left in the market. As the administration continues to reshape U.S. trade relations and international policies, corporate executives face the daunting task of planning their companies' annual prospects. McCormick & Company's CEO Brendan Foley stated during Thursday's earnings call that the overall environment in the company's core markets remains volatile, with persistent pressures from inflation, geopolitical and trade uncertainties, alongside the risk of rising unemployment, leaving overall consumer confidence at low levels. The spice company's fourth-quarter profit and annual outlook both missed expectations, leading to its largest single-day stock drop in two years. Procter & Gamble, which owns brands like Pampers diapers and Tide detergent, also pointed to similar external disruptions but projected sales growth over the next six months. Both Procter & Gamble and McCormick noted that the U.S. government shutdown negatively impacted their sales, as the interruption of food assistance programs temporarily suppressed the purchasing power of lower-income consumer groups. Companies in the industrial sector widely reported that adverse demand-side factors persist. Fastenal's CFO stated that the U.S. economy "continues to send mixed and conflicting signals, particularly in the industrial sector." Executives at J.B. Hunt Transport Services indicated that despite a tightening labor supply due to immigration policies—which typically drives up freight rates—the freight market has remained unstable since the start of the year. United Airlines stated that U.S. military actions concerning Venezuela have had a "significant negative impact" on ticket bookings in the Caribbean region. The airline's CEO Scott Kirby warned that geopolitical risks could disrupt what had initially been a positive start to the annual operational rhythm. The Chicago-based carrier also noted that the administration's push for a credit card interest rate cap has had a greater-than-expected impact, a consequence of the deeply integrated co-branded credit card partnerships between airlines and the payments industry, which generate substantial revenue for carriers. Conversely, some measures within the administration's policy agenda may provide short-term relief for consumers. Investors believe that substantial tax refunds and potential stimulus measures could, at least temporarily, support spending by lower-income households. The White House has made "alleviating the cost of living" a core part of its policy宣传, including initiatives like the aforementioned credit card rate controls and policies pushing technology companies to bear rising electricity costs. Eric Clark, Chief Investment Officer at Accuvest Global Advisors, remarked, "This being a midterm election year in the U.S., related policy rhetoric has already begun. No one can be sure if these measures will truly benefit consumers, but they might create a perception that supportive policies are on the way, which could ultimately boost consumer confidence."