A $10 trillion rally hinges on earnings nobody has a clue about

True, companies had had time to devise plans for a world reordered by the coronavirus. But stocks are also coming off their best quarter in 22 years, with valuations by some measures the most expensive in two decades. Add to that: earnings estimates proffered by analysts are even more speculative this time around, after 80% of companies refused to provide guidance over the last three months.

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“Investors are going to start demanding a little bit more clarity — whether it’s good or bad, they just want to know,” said David Lebovitz, a global market strategist at JPMorgan Asset Management. “If nothing else, managements have a bit more of a play-book for thinking about dealing with the virus than with the case back in March.”

Banks are set to kick off the second-quarter reporting season in less than two weeks. At first glance, the 44% profit contraction expected for S&P 500 companies — the worst since 2008 — seems at odds with with the explosive rally that’s restored most of what was lost in the March meltdown. Yet Wall Street pros will know the stock market long ago discounted all that. It’s not recent history that matters, but rather expectations for the future.

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