With 25% of companies in the S&P 500 reporting first quarter results as of Tuesday, earnings season picks up meaningfully over the next couple weeks. So far, actual results have come in weaker than average, with earnings beats (reported earnings >analyst estimates) hovering around 70% vs. 77%, historically. Additionally, the magnitude of those earnings beats has been more modest than usual, coming in at 6.1% above estimates vs. 8.8%, historically. Market participants will be watching to see if this is the beginning of a worrisome trend or a blip in what has otherwise been a string of strong earnings seasons. If analyst forecasts of approximately 7% year-over-year earnings growth comes to fruition, it will mark the seventh consecutive quarter of year-over-year earnings growth for the index.
Federal Reserve Independence
Highlighting the history of Central Bank Independence and what it means for our financial system - Federal Reserve Independence and Accountability | In Plain English | St. Louis Fed The importance of the Federal Reserve on the U.S. economy and financial markets cannot be overstated. Jerome Powell, current Federal Reserve chair, is arguably the most important person in the financial world. Independence of the Federal Reserve, which is their ability to make monetary policy decisions without interference from the White House or Congress, is another crucial part of financial markets and the stability of our financial system. However, there have been recent headlines of President Trump threatening to fire Chair Powell. While I won’t take sides on the issue, these developments are worth paying attention to - but trying to differentiate between threats vs. action with all the back and forth we have witnessed on numerous issues, is very difficult. At the time of this writing, President Trump has stated he “has no intention of firing Fed Chair Powell.” This is contrary to what we have heard from other senior White House officials, who stated last week that they were actively exploring options to remove Chair Powell.
China Tariffs
Latest reports suggest the White House is contemplating reducing the most recently announced tariffs on China from 145% down to 50%-65% (per the Wall Street Journal). This underscores a heightened level of policy uncertainty, and ultimately its impact on a company’s capital expenditure plans and the global economy in general.
Financial Planning Corner
An Extension to File Is Not an Extension to Pay
As the April 15th tax filing deadline has passed, millions of Americans filed an extension – allowing them 6 months (until October 15th) to file their 2024 return. As someone who has helped prepare tax returns at a prior firm and communicated with clients throughout the process, many mistakenly believe there is a penalty associated with filing an extension - this is not the case. However, an extension to file is not an extension to pay. There are failure to pay penalties the IRS assesses if the IRS safe harbor provisions aren’t followed - Safe Harbor for Underpaying Estimated Tax | H&R Block. The failure to pay penalty is 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid – not to exceed 25% of your unpaid taxes. Best to abide by IRS rules😊.
Quick Hits
- Summer travel season is right around the corner – here are a few domestic and international recommendations: 13 Underrated Summer Travel Ideas for 2025 - Trip Canvas
- With Mother’s Day a couple weeks away: 50 Best Mother’s Day Gifts in 2025 She'll Actually Love
- As someone with high cholesterol, this is a great list to reference: Cholesterol: Top foods to improve your numbers - Mayo Clinic
Quote: “A mother’s love is the fuel that enables a normal human being to do the impossible.” – Marion C. Garretty
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