Q1 earnings are strong, but what about the rest of 2025?, plus 🧁 weekend sprinkles 🧁
The Sandbox Daily (5.9.2025)
Welcome, Sandbox friends.
What a week! A new pope was elected head of the Catholic Church, bitcoin eclipsed the round $100k mark, and the United States and the United Kingdom announced a framework for the first trade deal post-Liberation Day.
Today’s Daily discusses:
Q1 earnings are strong, but what about the rest of 2025?
weekend sprinkles
Let’s dig in.
Blake
Markets in review
EQUITIES: Nasdaq 100 -0.01% | S&P 500 -0.07% | Russell 2000 -0.16% | Dow -0.29%
FIXED INCOME: Barclays Agg Bond +0.10% | High Yield +0.06% | 2yr UST 3.897% | 10yr UST 4.384%
COMMODITIES: Brent Crude +1.77% to $63.95/barrel. Gold +0.84% to $3,334.1/oz.
BITCOIN: +1.04% to $103,209
US DOLLAR INDEX: -0.21% to 100.426
CBOE TOTAL PUT/CALL RATIO: 0.81
VIX: -2.58% to 21.90
Quote of the day
“Today I will do what others won’t, so tomorrow I can accomplish what others can’t.”
- Jerry Rice
Q1 earnings are strong, but what about the rest of 2025?
As we approach the end of corporate earnings season, the now backward-looking results from Q1 can be best described as better-than-feared.
In aggregate, year-over-year S&P 500 earnings growth is tracking higher than expectations at the start of the earnings season (12% vs. 6%) – and better than the ~9% long-term average growth in EPS.
Unfortunately, these results are somewhat meaningless because the world today is much different than pre “Liberation Day.”
Sure, the U.S. economy was quite robust in Q4 of last year (+15% EPS growth) and Q1 of this year (+12% EPS growth) ahead of President Trump’s tariff sledgehammer – but that was then.
What matters most to markets is where the puck is going.
Looking forward, guidance trends from corporate America itself reflect an elevated level of cautiousness.
We’ve seen some companies pull them altogether, others issue two sets of guidance (swift tariff resolution vs. possible recession), and the rest offer the standard forward guide (up/down/maintain).
The most notable takeaway over the last few weeks is companies are just maintaining their full-year numbers (58% vs. 41% historically), rather than guiding higher (26% vs. 41% historically) – a direct reflection of trade uncertainty.
In stark contrast, Wall Street has made their move.
While the actual quantifiable impact of tariffs and U.S. growth risks remain a big unknown, strategists have already adjusted their numbers lower towards what’s perceived to be more reasonable expectations.
In fact, forward earnings revision trends, which had been stagnant (albeit lower) throughout the year as analysts assessed trade risks, have started to decidedly swing negative since April 2. Look below at Q2, Q3, and Q4 all nose-diving as each respective earnings quarter has been cut in half, or more.
And yet, many investors believe these revised consensus numbers are still too high.
That sentiment can be expressed visually by comparing the current year’s path of revisions lower against the historical patterns. Many feel the green line below should be tracking much lower than the grey line.
One encouraging sign that estimates reflect the rising probability of weak incoming economic data are the upward revisions to future earnings, or lack thereof.
Positive revisions to S&P 500 earnings forecasts have crashed to levels only eclipsed by the covid pandemic, the Global Financial Crisis, and the dot com bust. This suggests a very high anxiety quotient among market participants.
The full extent of the damage from tariffs won’t show up in the results of corporate America until Q2.
Stay tuned for July when those results roll in.
Sources: Goldman Sachs, Bank of Montreal, Bloomberg
🧁 Weekend sprinkles 🧁
Here are the ideas, sights, and sounds that caught my attention this week – perfect for quiet time over the weekend.
Blogs
Bloomberg Odd Lots – It’s Not Quite Business as Usual in Markets (Tracy Alloway and Joe Weisenthal)
Potomac – It’s All About Timing: Why Birth-Date Luck Should Matter to Investors (Tyler Lovingood)
Advisor Unlock – Stop Saving: Give Your Kids the Money Now! (Ben Carlson and Nick Maggiulli)
Multi-Asset Perspectives – My Friend Called My Profession "BS"; Here's How I Responded (Sébastien Page)
Podcasts
Lex Fridman Podcast – Janna Levin on Black Holes, Wormholes, Aliens, Paradoxes, and Extra Dimensions (YouTube, Spotify, Apple Podcasts)
Movies/TV Shows
The Four Seasons – Tina Fey, Steve Carell, Will Forte (Netflix, IMDB, YouTube)
Music
VHS or Beta – All Summer in a Day (Spotify, Apple Music, YouTube)
Books
Sahil Bloom – The 5 Types of Wealth: A Transformative Guide to Design Your Dream Life (Amazon)
Fun
“Sport is so soft these days.” NHL: “hold my beer…” The Battle for Alberta. (Instagram)
That’s all for today.
Blake
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Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.
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