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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.

Caitlin Owens, author of Vitals
47 mins ago - Health

Who benefits from Biden's move to reopen ACA enrollment

Photo: Chip Somodevilla/Getty Images

Nearly 15 million Americans who are currently uninsured are eligible for coverage on the Affordable Care Act marketplaces, and more than half of them would qualify for subsidies, according to a new Kaiser Family Foundation brief.

Why it matters: President Biden is expected to announce today that he'll be reopening the marketplaces for a special enrollment period from Feb. 15 to May 15, but getting a significant number of people to sign up for coverage will likely require targeted outreach.

2 hours ago - Technology

Big Tech bolts politics

Illustration: Eniola Odetunde/Axios

Big Tech fed politics. Then it bled politics. Now it wants to be dead to politics. 

Why it matters: The social platforms that profited massively on politics and free speech suddenly want a way out — or at least a way to hide until the heat cools. 

You’ve caught up. Now what?

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