What Are They Smoking?

(1) High on life, revenues, and earnings. (2) Revenues are strongest among cyclical sectors. (3) As latest earnings season unfolds, Q1 beat expectations, yet remaining quarters remain unchanged. (4) Analysts now predicting earnings will grow 21% this year and 10% next year. (5) Profit margins at record highs. (6) Margins could get squeezed by more outlays on labor and capital. (7) Our earnings estimates are upbeat, but not as much as analysts’ consensus. (8) Alternative earnings scenarios are mostly bullish for stock prices.