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USA Inc is vastly exceeding expectations. First-quarter earnings reported as of last Friday had beaten analysts’ forecasts by a mammoth 30%; usually “earnings beats” are about 3%-6%, says Bob Pisani for CNBC. The unprecedented uncertainty triggered by the pandemic caused many blue-chip firms to withdraw their guidance last year. That prompted the analysts who study these firms to make very conservative forecasts for the earnings outlook, which were widely thought to be too pessimistic. Most people expected this quarter’s earnings to be good, “but this is really good”.
US stockmarket valuations are historically high on a cyclically adjusted price/earnings ratio (Cape) of 34.6, according to Mebane Faber of Cambria Investment Management. Strong earnings are one way of bringing those valuations down to a more reasonable level. Bank earnings have been especially impressive, says The Economist. JPMorgan Chase reported record revenue in the first thre
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