By J.P. Morgan Asset Iris.xyz
- Volatility returned in the first quarter of 2018 as markets struggled to find their footing amidst concerns of inflation, softening economic data and political uncertainty.
- The 1Q18 earnings season is booming, with the number of companies beating on earnings pace for a new record and the margin by which they are beating, measured by the earnings surprise, also on a record pace.
- Cyclical sectors such as financials, technology, energy and industrials should have a strong quarter on the back of tax reform, strong global growth, a weaker dollar, rising oil prices and expanding margins.
- While 2018 will see a one-time surge in earnings, in part due to tax reform, investors should curb their enthusiasm for earnings in 2019 as rising rates and wages could begin to put downward pressure on margins.
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