Here’s the updated spreadsheet with LSEG data showing the progression of earnings and revenue growth for expected Q2 and Q3 ’25.
Frankly, all investors care about is “actual” Q2 ’25 EPS results which start the week beginning July 14th, and what the guidance for Q3 ’25 (and the rest of 2025) looks like.
President Trump looks like he is starting “Tariffs Round 2” on Monday, July 7th.
How did Q1 ’25 perform in terms of expectations vs actual ? Pretty solid actually, as this blog post from late April ’25 showed. This pattern repeats itself every quarter.
The above table shows the progression of Q1 ’25 EPS and revenue, after hitting its nadir in late March, early April, ’25. From the “expected EPS growth” low point for Q1 ’25, the actual growth almost doubled by the end of June ’25.
You wouldn’t think the SP 500, the Nasdaq Composite, and the Nasdaq 100, would have made all-time-highs last week, if tariff or stagflation, or whatever else the Fed is worried about were sitting under the surface.
That’s an opinion. Remember it could all be wrong. And remember too, the tariffs are all about the deficit with the ultimate goal of reducing the deficit from 7% of GDP. It does appear that Treasury Secretary Bissent has lowered “expected” tariff revenue from $700 – $800 billion which he provided in early April ’25, to $400 billion currently, which is the last estimate I personally saw. I do hope Treasury Secretary Bissent refreshes his / Treasury projections about tariff revenue this week, with the expected new round of tariff headlines due to come forth from President Trump’s desk.
(Here’s one final note on the tariffs: Nike reported their fiscal Q4 in late June ’25, and noted that they expected a $1 billion “cost” to tariffs, and while I haven’t yet read the conference call notes, I assumed the “$1 billion cost” comment was for their fiscal ’26 estimate since fiscal ’25 ended in May ’25. With 1.44 billion shares outstanding that’s a $0.63 hit to earnings for the current fiscal year. The stock actually bottomed with that earnings release, and is now $13 higher than the 3 pm close on the day it reported. It’s unlikely all potential tariff costs are in the SP 500 EPS estimates but looking back at 2017 – 2018, the companies back then that were impacted tended to adjust their P/L’s within a couple of quarters.)
Looking for non-correlated:
If readers are looking for “uncorrelated” or “non-correlated” stocks (and non-correlated is the MBA way of saying your stock, or asset-class has performed remarkably poorly), asset classes, don’t forget the small and mid-cap (SMID) space. This blog post from last week, showed the under-performance of both small and mid-caps, but charts tell the story better:
The above chart shows the Russell 2000 total return vs the SP 500 total return and the MDY or Mid-Cap 400 ETF from January1, 2010, to June 30 ’25.
This above chart shows the same three indices from 2015 to June 30 ’25 and the underperformance of SMID vis-a-vis the SP 500 total return look worse.
Small and mid-cap and international and value all dramatically outperformed after the SP 500 peaked in March, 2000. AI and momentum is (are) still leading the style-box groups if you adopt a narrower focus, but that will end someday.
There’s already a shift happening within the Mag7 and Mag-10. Doubts about Alphabet and Apple have depressed the stock prices. Maybe the Mag-7, Mag-10 and technology underperformance will be a gradual fade when this bull market ends, versus the mid-March, 2000, complete bust that happened in March, 2000.
Small and mid-caps are not heavily trafficked or chatted about on the financial media, which might be the time to start adding to them in small allocations.
None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results. None of this information may be updated, and if updated may not be done so in a timely fashion.
Thanks for reading.