The Micro View - Q2 Earnings Season: Past, Present And Future

It is obvious by now that the macro economic picture is collapsing.  The only good news is courtesy of the micro economy, specifically corporate earnings, where massive deleveraging and cash hoarding is the only thing keeping the economy alive at this point. Here is Goldman's David Kostin with a perspective on the Q2 earnings season: where we were, are and are going. 

PAST: 2Q 2010 earnings season - We expect index-level 2Q 2010 earnings will positively surprise relative to bottom-up consensus expectations. Of the 37 companies already reported, 20 beat consensus EPS expectations by more than one standard deviation.

PRESENT: 2010 full-year earnings outlook - Our full-year 2010 S&P 500 operating earnings forecast of $78 per share implies 4% potential negative revisions to current bottom-up consensus estimates of $82. GS Economics expects US GDP growth will slow to 1.5% annualized pace during 3Q and 4Q 2010, below the consensus estimates.

FUTURE: How various economic scenarios will affect 2011 - EPS Investors are intensely focused on the profit outlook for 2011 more than 2Q results. We provide sensitivity analysis around our 2011 EPS forecast of $93 adjusting assumptions for US real GDP growth.