Stock Market is Expecting a Big 2021 Earnings Comeback

So why are stocks so high again? It comes down to the recovery in earnings. Here is data from Factset on earnings expectations the rest of the year and now 2021.

Estimated Change in Earnings from Insight Factset Reports

You can see two things. First, earnings expectations for the year are now starting to flatten out. But now we have an idea of earnings expectations for 2021: Growth of almost 30% over 2020. That would make 2021 earnings equal to 2019 earnings.

The question is will earnings recovery that quickly. In the 2007-09 recession, it took earnings 4 years to recover. In 2001, it took earnings 3 years to recover. This would be 2 years.

OC Covid Data: Still Climbing

Here’s the most updated data on OC testing. Note the data for number of tests was updated for the prior week (surprised the update on testing was so large).

Left Axis: 7-day moving average of new daily cases, Hospitalizations, and ICU patients. Right Axis: Number of tests

As you can see, the number of pretty much everything is at all time highs. Cases came down a little this week.

The next question is: Will Memorial Day festivities bring a surge of cases next week?