Strong Earnings vs Mid Cycle De-Rating
Comment of the Day

August 16 2021

Commentary by Eoin Treacy

Strong Earnings vs Mid Cycle De-Rating

Thanks to a subscriber for this report from Morgan Stanley which may be of interest. Here is a section:

Eoin Treacy's view

A link to the full report is posted in the Subscriber's Area.

The big question for investors is how to attribute responsibility for the strong earnings growth in the 2nd quarter. There is a good argument that much of the surge in earnings was due to pent up demand and outsized liquidity provision. As the economy opened up and confidence built around the protection offered by vaccinations there was a surge of economic activity. In order for the pace of the recovery to be self-sustaining, consumer confidence has to continue to recover and liquidity needs to remain abundant.

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