Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Nashville news?

Get a daily digest of the most important stories affecting your hometown with the Axios Nashville newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Columbus news?

Get a daily digest of the most important stories affecting your hometown with the Axios Columbus newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Dallas news?

Get a daily digest of the most important stories affecting your hometown with the Axios Dallas newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios NW Arkansas

Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Earnings season officially kicks off today with big banks reporting and analysts are expecting strong outperformance.

What's happening: In the second quarter there was an unusually high 12.5 percentage point improvement in earnings results from their original projections (to -31.6% from -44.1%) due to a record-high percentage of companies reporting positive EPS surprises (84%).

  • Investors are betting on a repeat, as Q3 earnings estimates have been consistently upgraded over the past few weeks, to -20.5% from -25.3% on June 30.

The state of play: Earnings per share estimates have seen the second-highest upward revision since the financial crisis, Savita Subramanian, head of U.S. equity at Bank of America Securities, says in a note to clients.

  • She's expecting even better results based on the economy's better-than-expected third quarter macroeconomic data and predicts earnings will be 5 percentage points better than even the improved expectations.
  • That's thanks to exceptionally strong manufacturing and non-manufacturing PMI reports, rising oil prices, strong consumption trends and a weakened dollar.

Where it stands: Of the 22 S&P 500 companies that already have reported earnings, 20 beat estimates, and they beat by a margin of 25%, according to Nick Raich, who tracks corporate earnings at Earnings Scout.

  •  “Analysts have not had the benefit of corporate guidance, and without that guidance, they assumed the worst, and the worst has not come,” Raich told CNBC.

By the numbers: Over the past five years on average, S&P 500 companies have exceeded estimated earnings by 5.6%, per FactSet, and 73% of S&P companies have reported actual EPS above the mean EPS estimate on average.

Yes, but: Even if earnings do beat by 5 percentage points from their improved level, the actual earnings decline for the quarter would be 17.6%, the second largest year-over-year decline by the index since Q2 2009 (-26.9%), trailing only the previous quarter's earnings (-31.6%), FactSet notes.

  • The S&P 500 is 20% higher than it was a year ago.

Go deeper

Dion Rabouin, author of Markets
Jan 12, 2021 - Economy & Business

Twitter's stock slump is about more than banning Trump

Data: FactSet; Chart: Axios Visuals

Twitter shares fell by as much as 12% on Monday after the company announced it had permanently banned President Trump's account.

Between the lines: While many were quick to say the decline was blowback for the company's decision, the performance of other social media companies' stock prices suggests there's more to the story.

2 hours ago - World

Biden seeks to reboot U.S. sanctions policy

Sanctions increased under Obama and dramatically under Trump. Photo: Tom Williams/CQ Roll Call

The Biden administration is rethinking the U.S. approach to sanctions after four years of Donald Trump imposing and escalating them.

The big picture: Sanctions are among the most powerful tools the U.S. has to influence its adversaries’ behavior without using force. But they frequently fail to bring down regimes or moderate their behavior, and they can increase the suffering of civilians and resentment of the U.S.

2 hours ago - World

Merkel's farewell spoiled by Poland crisis at EU summit

One last awkward EU "family photo." Photo: John Thys/AFP via Getty Images

Angela Merkel took up her vaunted mantle as Europe's crisis manager for what could be the last time tonight, as she urged the EU to find compromise in its showdown with Poland.

Why it matters: The European Commission has threatened to withhold over $40 billion in pandemic recovery funds after Poland's constitutional tribunal — stacked with loyalists from the ruling right-wing populist party — rejected the principle that EU law has primacy over national law.

You’ve caught up. Now what?

Sign up for Mike Allen’s daily Axios AM and PM newsletters to get smarter, faster on the news that matters.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!