What 25,000 U.S. Corporate Transcripts Revealed to JPMorgan

(Bloomberg) -- Geopolitical concerns have reached the highest level in five years, while concerns about higher wages may be diminishing, according to a JPMorgan Chase & Co. study.

Energy, technology-hardware, banks and transportation companies increased references to geopolitics, while banks talked about the global economic growth outlook and reduced client activity. That’s according to an analysis by JPMorgan strategists including Dubravko Lakos-Bujas of more than 25,000 recent earnings transcripts, conference calls and question-and-answer sessions for S&P 500 Index companies.

“Contrary to popular investor narrative, fewer S&P 500 companies are highlighting rising wages as a risk,” the JPMorgan authors said in the report dated March 3. There was less concern about labor costs from sectors that tend to employ more skilled workers, while labor-intensive industries see issues arising from a tightening market.

Personnel costs aside, strategists have been divided on what earnings are going to do this year given trade tensions and a less robust global economy. Morgan Stanley’s Mike Wilson has declared that there’s already an earnings recession, while Goldman Sachs Group Inc.’s David Kostin and Credit Suisse Group AG’s Jonathan Golub said an out-sized drag from a few firms threatens to obscure good news in other places. BMO Capital Markets’ Brian Belski said fears about weakness are “overblown.”

JPMorgan is in the latter camp, reiterating a target of 3,000 for the S&P 500. The gauge closed Monday at 2,792.81.

Discussion of the U.S. dollar increased among companies in the industrial, materials, staples and technology sectors, the report said. Autos expected further currency headwinds in 2019; technology hardware and equipment companies in particular flagged issues in emerging markets.

What 25,000 U.S. Corporate Transcripts Revealed to JPMorgan

And even though the U.S.-China trade dispute continues, it appears to be less of a wild card now in some areas. Technology hardware, retail and auto companies discussed the issue more, while areas including materials and consumer durables saw a drop in mentions. Investors are likely “now better versed on this risk,” JPMorgan said.

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