Thus far Tech earnings are playing out as we anticipated. Q2 reports have essentially been in-line. Q3, Q4 and 2021 consensus estimates will likely be revised downward in our view as economic recoveries are not linear.
Much like Q1 earnings season, we expect that on the Q2 earnings calls many companies will lean on COVID as an excuse to not provide formal Q3, Q4 or 2020 guidance. This will lead to increased estimate disparity. Fundamentals will matter more with each passing quarter, especially post-election when federal motivation for additional debt-funded economic “stimulus” will be substantially less. A weak economic backdrop, high unemployment and post-election tax hikes each will apply downward pressure to equity valuations, particularly post-election.