Global markets are rallying on China and Jamie Dimon


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Traders and financial professionals work on the floor of the New York Stock Exchange (NYSE) ahead of the opening bell, January 4, 2019 in New York City.

Stocks are rallying around the world on two headlines that support the bull thesis: strong China economic data and J.P. Morgan CEO Jamie Dimon’s supportive comments on the U.S. economy.

U.S. stock futures took another move up at 6:50 a.m. ET when J.P. Morgan reported numbers well above expectations, but more importantly Dimon provided this comment on the macro environment: “Even amid some global geopolitical uncertainty, the U.S. economy continues to grow, employment and wages are going up, inflation is moderate, financial markets are healthy and consumer and business confidence remains strong.”

Some geopolitical uncertainty. U.S. economy growing. Inflation moderate. Strong consumer. This, Nick Raich from Earnings Scout tells me, plays into the bull scenario that China is bottoming and the U.S. economy will remain strong: “The main story for investors this year is the numbers are better than feared,” he said.

Raich notes that including the four banks reporting today, 29 companies have reported earnings for the first quarter so far. Of that, 83% are beating estimates, higher than normal. Most importantly, they are beating by an average of 7.2 percentage points, far higher than the usual 3.5 percentage point beat.

That’s because analysts dramatically cut estimates in December on concerns of an imminent global meltdown, which has not happened.

Bottom line: Dimon’s comment reduces fears of an imminent recession, and there is a good chance we will avoid seeing the S&P 500 earnings go negative for the first quarter.

No earnings recession I guess.

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