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You can thank the bankers for getting in the president’s ear, helping to convince him that a tariff pause was the right move.
The bond sell-off did the heavy lifting, compelling the White House to pivot where days of stock market hemorrhaging failed to dissuade. But with the big banks unofficially kicking off earnings season Friday, the private lobbying and public prodding were also a sign of desperation and a testament that tariff policy and the trade war are all that matters.
That won't change. As last quarter's earnings and prior outlooks fade into background noise to the immediate drama of tariff turmoil, what investors are looking for now is what the import taxes, months of uncertainty, and future uncertainty mean for businesses in the months ahead.
How badly will Trump’s tariffs eat into corporate profits? How can supply chain acrobatics offset the severe levies on China? And what special exemptions can key industries and big-name brands win from the White House? And how to read between the corporate lines, given that companies may be lobbying and hoping for those exemptions?
Corporate earnings have always had a forward-looking orientation. What matters more are the quarters ahead, not the last one. (Just ask Tesla!) But the outlooks attached to first quarter earnings will take on an outsized importance this go-around.
Like Thursday’s inflation data, the coming quarterly reports largely won’t account for Trump’s economic policies. And in the flurry of events over the past month, what happened last week on Wall Street might as well be a year ago. And earlier in the quarter is even further in the rear-view. The acceleration of news cycles and the volatility of trading swings have a way of making even recent episodes feel irrelevant and outdated.
Analysts have slashed their earnings estimates for the first quarter by more than 4%. And it’s still unclear how deeply they will cut forecasts for the year as the tariff policies take shape and make their mark. Some analysts see 2025 as a “lost year” for corporate profits.
Getting outlooks from companies at all might be an improbability. Investors may face an information vacuum as executive teams choose not to share more than they have to.
“There is a reasonable probability that absent some resolution/clarity, transparency could be compromised," said Savita Subramanian, a strategist with Bank of America Global Research, in a note to clients on Thursday. "Companies tend to shut down guidance amid uncertainty.”