Watch: Capital Wealth Planning’s Kevin Simpson and Investor’s Advantage Corp’s John Grace on the markets

Skeptical but Positive: Earnings Season Outlook

Next Steps for Investors Amidst Coronavirus

As the earning season progresses, Investor’s Advantage Corp’s John Grace and Capital Wealth Planning’s Kevin Simpson joined Yahoo Finance’s “The Ticker” to discuss current performance against market expectations.    

Market Check

When asked if current earnings are enough to satisfy market expectations, Grace shared positive reportings, but indicated growth of a lesser degree than years past. “{Earnings} are up, but if we look at numbers compared to last three years, they’re not up as much – 4.7% vs. 5.2% with 60% reporting. Fourth-quarter over the last three years was 71% over the same time frame.”

Grace closed with a deliberate message. “Companies have to earn earnings this time with revenues.” Coinciding with Grace, Simpson indicated better earnings than expected when asked about his reaction, and shared the following outlook.

“Companies need to earn their stripes, and surprisingly, are starting to do so.”

Market Reaction to Coronavirus

Despite earnings having a big impact, focus is now on the Coronavirus. When asked his read on how big of a threat this could be to the U.S. economy and the markets, Grace answered that only time will tell how severe this virus will be and how much industry will come to a stop. “We’ve enjoyed optimism, and prices have risen based on that optimism. But simultaneously investors need to prepare for a slowdown, which may be followed by a meltdown.”

Buying Opportunity After Recent Selloff or Uncertainty?

In response to a question about market rebound, Simpson shared that he continues to be pleasantly surprised. “We are typically invested in equities so it’s nice to see green over red.” In comparing the Coronavirus to SARS back in 2002 and 2003, Simpson discussed China’s economic rank then versus now. “The severity of this will take time to play out. When SARS occurred, China was an emerging market. Now it’s the second largest economy in the world and they’re essentially closed for business.” Closing advice was to remain skeptical but positive.

Sectors Outlook

Healthcare demand is steadily rising. When asked which sectors he is favoring for the foreseeable future Grace pointed confidently to this industry.

“All things healthcare will stand test of time. More people globally are now 65 and older than five and younger. We’ve never been here before. We are not going to do what we’ve done in the past because we don’t have the people we had in the past.”