What to Watch This Earnings Season

Plus: Tracking the Delta Variant
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How to follow the Q2 earnings season like a pro: The second-quarter earnings season will kick into high gear next week, starting primarily with banks such as JPMorgan Chase (JPM)Citigroup (C) and Bank of America (BAC), plus other blue chips including PepsiCo (PEP) and Delta Air Lines (DAL). As always, you can check out our regularly updated previews and calendar of each week’s earnings expectations. But for those who like to follow their holdings extra closely, Michael Reinking, senior market strategist for the New York Stock Exchange, offers up several things investors should be listening carefully for on their companies’ conference calls. They include: Are margins being pressured by cost inflation associated with raw materials, logistics or wages? (Also, how is management mitigating these problems, how long do they think they will persist, and is the company raising prices?) How is the company managing supply chain disruptions and inventory levels? Are they planning on increasing capital expenditures? Has demand shifted due to recent government stimulus bills? (And does management expect to see a drop-off as that funding ends?) And how is the company thinking about the post-pandemic workplace/workforce? The answers to these questions will be especially useful in determining how well each company is transitioning into the next stage of the economic cycle.


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The more transmissible Delta variant of the coronavirus is now accounting for over half of new infections in the U.S., according to the Centers for Disease Control and Prevention. In current hot spot areas like Missouri and Arkansas, it accounts for over 80% of new infections. Four weeks ago, Delta accounted for only 10% of U.S. infections. The rapidity with which Delta is spreading indicates a possible upturn in the U.S. infection rate from its low level in June. The bad news is that only one shot of the Pfizer (PFE) or Moderna (MRNA) vaccines is ineffective against Delta. Antibodies from infection with an earlier strain of the virus don’t appear to help much, either. The good news is that several studies have indicated that two shots of the existing vaccines are sufficient to protect against severe symptoms, even if protection against infection is diminished. Over the past few months, 99.5% of COVID-related deaths have occurred among the unvaccinated, according to the CDC.

Pfizer and the CDC disagree on the necessity for booster shots above the two doses already given. Pfizer says it is seeing waning immunity over time after a two-shot dose of its vaccine, and announced its intention to develop a booster shot. The CDC and FDA jointly rebutted Pfizer’s claim, stating that booster shots were not needed at this time. The World Health Organization said that more data are needed before making such a conclusion.

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