According to data from Bank of America (BAC) Merryll Lynch published on Monday, guidance hasn’t been this strong since late 2010.
The firm notes that the ratio of companies issuing positive to negative outlooks is at its best in about seven years and the trend has improved all year long.
Now, a lot of this has to do with the dollar. A weak dollar has boosted the outlook of the multinational companies and Bank of America notes that companies with high foreign exposure are guiding higher by a ratio of about 3:1.
Of course the market logic of good news actually being bad news can prevail here. Analysts say that the market has already priced in strong earnings and the S&P 500 was up 4 percent in the third quarter to hit fresh record highs.
And yet in the third quarter, investors are expecting another deceleration in the year over year earnings growth. And on this background the guideance better still be good or else markets might wonder what all the fuss was about.
Meanwhile, on the calendar for today we will get the latest reading on small business confidence which has been one of the strongest economic indicators since the election, with the economist zeroing in on small business plans for jobs hiring and perhaps even increasing wages.