It’s A Big Week For Big Brand Earnings & The US Economy

Janet YellenThis week is a huge week for major household brands as well as the United States economy. Recently, oil prices have begun to stabilize, positive economic data has been reported, and things seem to be going better than expected for the US economy. However, this week’s reports give us a close up of what to expect moving forward. With major brands providing details about their Q4 earnings, we can start to gauge whether or not consumers are spending more money as a result of the added jobs and positive economic climate. So, what reports are coming out and when, what kind of results are expected, and could there be any negative repercussions of overly positive reports? We’ll discuss all of that today!

Household Brand Earning Report Schedule

This week, we are expecting to see reports from Kraft, Kellogg, Coke, Pepsi, and Whole Foods. Each of these companies are household names and provide products that consumers buy on a regular basis. Here’s when the reports will be coming…

  • Coke – Tuesday
  • Pepsi | Whole Foods – Wednesday
  • Kraft | Kellogg – Thursday

What Results Are We Expected To See?

The overwhelming opinion in the market is that we’re going to see positive earning reports. The bottom line is that in the fourth quarter, the United States added 257,000 new jobs to non-farm payrolls and grew full-time employment figures at an astonishing rate. With so many new jobs added, we have to imagine that overall, consumers are going to be spending more money. After all, if consumers aren’t spending more money, the corporations can’t afford to hire at the pace we’ve seen. So, it would only make sense that we would see overwhelmingly positive reports throughout the week.

Could There Be Any Negative Side Effects To Overwhelmingly Positive News?

Unfortunately, the answer is yes. However, the negatives would come in the long term. First, with some of our biggest trading partners around the world going through economic struggles, the values of currencies are falling; making foreign products more and more expensive. Therefore, as the United States economy continues to grow at a fast pace, the US dollar grows stronger and stronger at the same pace. As a result, foreign trade suffers because foreign consumers simply can’t afford to buy American made products. So, from a foreign trade standpoint, it is important that the economy grow at a slower pace than what we’re already seeing. With better than expected ports most likely on the horizons, we could see that growth kick into hyper drive; making a problem we’re already seeing worse.

Another thing that we have to keep in mind is the fact that the Federal Reserve is offering incredibly low interest rates right now. However, the interest rate hasn’t been that low forever and isn’t planned to stay there very much longer either. However, if the Federal Reserve starts increasing the rate too early, we could see major backlash in economic activity. While the Fed is pretty secretive about what they plan to do with the rate, we all know that when the economy is viewed as stable, we’re going to start seeing increases. If this was to happen as soon as some experts are expecting, we could see economic growth turn around; which is a very scary concept considering that we still haven’t completely recovered from the last recession.

Final Thoughts

What I’m hoping for is to see reports that show growth as expected or just below expectations. In this case, the economic would be growing; however, it would be growing at a rate that’s more sustainable. If we see the reports smash expectations and blow everyone away, the news might equate to bad news in the long run as the US Dollar will most likely start growing too fast and the Federal Reserve will most likely increase interest rates sooner than later. I’ll keep you posted as the reports become available.

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