America's CEOs Have Never Been More "Optimistic"

Tyler Durden's picture

It's not just US consumer optimism that recently hit all time highs (even if, as UMichigan explained last week, it was largely split according to party lines). According to a recent analysis by Bank of America, in the current earnings season which is gradually coming to a close, despite tepid guidance, "one read on corporate optimism is at a record high."

As BofA's Savita Subramanian writes, "guidance during 4Q earnings season is typically less positive than in other quarters as management sets a low bar for the year. While the ratio of above- vs. below consensus guidance has remained weak so far this month at 0.55, it is up from 0.44 in January and slightly above the post-2000 average of 0.48 for both months."

And yet, while managements’ official outlooks may be nothing to write home about, commentary on earnings calls has been notably optimistic. A simple count of mentions of the word “better” relative to mentions of “worse” or “weaker” on earnings calls is tracking its highest in over two years. And the word “optimistic” has been used on a record 51% of the calls this quarter, the highest ever in our data history.

Ironically the incidence of record high "optimism" mentions took place just one quarter after it hit a record low.

And while on the surface, this is great news for the future as it suggests companies may finally redirect their spending away from buybacks and dividends and into corporate growth, hiring and capex, it also means that the threshold for disappointment is the lowest it has ever been, and the pressure on both Trump and the Fed to deliver an environment that satisfied America's CEO has never been higher.

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Soul Glow's picture

Easy to be optimistic when you are flying away on a golden parachute and you are pissing on all the people below.

TAALR Swift's picture

Everything is awesome, when you're part of a team...

What team are you on?

Troy Ounce's picture

 

It is Merica so fakeness is 100%.

Unreliable Narrator's picture

The optimist lives a life of perpetual disappointment.

 

The pessimist lives a life of pleasant surprises.

malek's picture

Rrright.
The true pessimist wouldn't even know what "pleasant" means, as everything positive would be seen by him as a trick/trap.

GreatUncle's picture

Yet they slate Trump for doing this and plan to oust him?

scaleindependent's picture

The old quote about the cynic comes to mind.

A cynic is one who, when seeing flowers, looks around for the funeral. 

Raffie's picture

There will be lots of butt hurt when the markets go boom.

jmack's picture

I would want to know what methodology they are using to track these key words,  if they are merely searching for "better"  or "worse" with no context, then it is suspect  as the ceo could say "while last quarter was better, we are optimistic that next quarter will be less challenging" (or some such corporate gobbledy gook).  which would put the outlook in a decidedly different frame.

FreeShitter's picture

free money..whats not to like?

buzzsaw99's picture

big bonuses, what's not to like?

jamesmmu's picture

They will regret their recent job hiring when they saw their sales number this month. Enjoy the ride.

BillyBass's picture

Of course they are thrilled!  The money vacuum is set to "Max"!

Yen Cross's picture

 Welcome to Fantasy Island.  

brianshell's picture

Big business executives are paid with future stock options, thus avoiding high income tax rates. Their CFOs arrange for zero loans to buy back shares, watch the share price rise, then exercise their options at capital gains rates. It is a win win for them but their corporations suffer. The CEO, CFO and directors work together. That is what they talk about on the golf course. The zero loans come via the Fed window to a small group of eligible borrowers. The corporations like to have directors from one of these companies to make the golf club agreements.

Was there a law against that? Who rescinded it?

coast1's picture

did u see the hit on silver this morning?   dear lord, manipulation is getting more than obvious.  I think under $18 is where they want to stay awhile.

Solio's picture

We do have a huge pile of Certificates of Debt driven about in armored cars and stored in double-walled banks.

When did life become such a charade?

 

1913.