Winner's Curse, Central Bank Signals and Oil Decrease

The reporting season continues to beat analysts' forecasts with ease. About 40% of S&P 500 companies have already reported earnings. 83% of them exceeded earnings expectations and 79% exceeded earnings forecasts. It would seem that the golden age and shopping is the only reasonable course of action. But not everything is so simple. Will companies be able to continue to demonstrate such results? Will they face the curse of the victor? Indeed, in the next quarter, decisions will be based on the results of the previous super-successful quarter. And it is likely that good data against excellent data will look not as good, but as weak.

Moreover, changes are coming. The Bank of Canada was rather aggressive yesterday: the rate will be raised several months earlier than expected, the quantitative easing program is being phased out. And economists expect 13 out of 25 central banks to raise rates at least once before the end of next year, according to the latest global Reuters poll.
In general, we are watching the ECB today and the Fed and the Bank of England next week.

In fairness, we note that the Bank of Japan is happy with everything and it does not plan to change anything in monetary policy in the foreseeable future. But it has its own history - the absence of inflationary pressures, which is not typical for the United States or Europe. In this light, we recommend that you pay attention to the long-term sales of the Japanese yen across the entire spectrum of the foreign exchange market - primarily against the New Zealand and Canadian dollars.

Oil was under strong downward pressure yesterday. Well, still, oil reserves in the US are growing for the fifth week in a row (according to API data), and Iran, it seems, is ripe for a new round of nuclear negotiations. Taking into account the fact that coal prices in China fell by 40% over the week, it is likely that we are witnessing the end of the energy crisis with all the consequences for the prices of natural gas, oil and other substitute goods.