“It’s interesting because generally the earnings estimates, if you look at the aggregated consensus numbers, they tend to start high and drift lower. I mean, that’s sort of been a hallmark of earnings season. But this time around, this will be the first quarter since the corporate tax cut and the estimate is for a 17% year-over-year growth, and that estimate has been rock-solid now for probably at least four or five weeks. So it’s really interesting how it has not drifted down, and the same thing is true for Q2, which is pegged at 19% right now. So what I’m looking at for earnings season, which is of course starting now, is A: to see whether the companies will deliver that 17%, and my guess is that they are, because generally if they’re not going to, they will guide lower — you know, nobody likes surprises. But more importantly, will they guide towards the next quarter lower, the same, or higher? And again, the tax cuts were a really monumental event, a onetime event that a lot of companies weren’t even really expecting, and this will be the first quarter, post that tax cut. So it will be an important barometer to see where companies think they’re going, not so much in Q1 but moving forward. And if earnings growth stays up, you know, in the 17, 19, 20%, you can have what I would call a benign valuation reset. But if the numbers turn out to be either too high or they’re where they need to be but they will come down, then that maybe is a different story, cause then you lose that tailwind.”
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