US: Drama to continue with earnings season - BBH

US earnings season kicks into high gear with nearly 20% of the S&P 500 reporting in the week ahead while the summer drama is set to continue with Trump's son, son-in-law and former campaign manager are set to testify before Senate.

Key Quotes

“Among the highlights include Amazon, Facebook, Alphabet, Caterpillar, GM, and Chipotle.  With about a third already reporting, it appears that earnings growth is on track for around a 10% pace.  Fund managers who push back against claims that the market is overvalued point to the strong earnings growth underpinning prices.  Despite investors' preference for European shares over the US, we note that the S&P 500 has begun outperforming the Dow Jones Stoxx 600, by 5.75% over the past three months.”

“Meanwhile, the summer drama will continue in Washington, as President Trump's son, son-in-law and former campaign manager are set to testify before Senate committees this week.   News that Exxon was fined $2 mln last week for violating sanctions against Russia (while Secretary of State Tillerson was the CEO) is an additional distraction from the economic agenda that is beginning to press.  Leaving aside health care reform, the infrastructure initiative, and tax reform, the constraints of the debt ceiling are already evident in the T-bill market, and the FY2018 fiscal year begins in a little more than two months.”