With Q2 earnings season in full swing, hedge funds and other equity market participants are mulling over where the market might head next as it wraps-up a strong rally. According to a note from Goldman Sachs analysts, investors’ top concerns heading into the upcoming earnings season could be inflation and ESG (environmental, social, governance) issues.
From an article in Investing.com:
Inflation Amid Economic Growth: Corporate America and the economy are running on all cylinders right now, while Europe is also finding its footing. Inflation is often a byproduct when growth runs above the long-term average of 2-3% per year. Companies voiced that issue on conference calls during the previous earnings season. FactSet reported that the first quarter 2021 earnings season featured the highest percentage of S&P 500 companies citing “inflation” on earnings calls in over 10 years. Expect more of the same with particular emphasis on supply chain constraints and order backlogs across many cyclical and consumer sectors.
J&J will discuss how it has driven long-term value creation for shareholders, while addressing the concerns of all stakeholders, in an upcoming ESG Investor Update on Wednesday. “The company will outline its approach to managing environmental, social, and governance (ESG) risks and opportunities across its business portfolio,” Johnson & Johnson said in a press release.
Energy companies will be looking to post better numbers and attract more investors. In last week’s Jay Young’s industry insights, he had pointed out that the most profitable companies to look for are the energy companies.