Four times a year, US companies give away more information about their business than they’d like.
For investors, this quarterly ritual is a chance to get an update on the state of America’s largest companies, the overall economy, and get a certain outline of where things are headed next.
But the earnings period is starting to look like it might fall way short of meeting these marks.
For one thing, companies are pulling guidance left and right because of uncertainty related to Trump’s tariffs. American Airlines (AAL) is just the latest. It’s an expected outcome, of course, because if you can’t feel good about internal forecasts, why would you offer investor-facing guidance? After all, guidance isn’t a required disclosure.
Another emerging trend, however, might be even more challenging for investors: demand (and profits) getting pulled forward.
In a note to clients on Thursday morning, Wamsi Mohan and the team at Bank of America lowered their price target on Apple stock by $10/share while raising their sales estimates for its most recent and current quarter “driven by some pull forward of demand” due to tariffs.
For the balance of the year, Mohan’s team cut these estimates “to adjust for higher costs of navigating a more complex supply chain and for delays in launching an AI enabled Siri.”
This indicates that the company is really facing headwinds on three fronts: consumer demand related to tariffs, supply chain issues related to tariffs, and strategic questions.
All businesses always face the third. That’s what business is: a rolling series of strategic decisions that are either working or not.
But the first two are where we’re finding the bulk of companies and analysts spending the bulk of their time. And neither the impact on consumer spending nor the impact on business investment from tariffs is easily quantifiable right now.
Making the most pressing economic question facing companies and their workers unanswerable, while the most persistent economic questions facing companies and their workers get put on the back burner.
