It’s Groundhog Day for Corporate America

Somehow, it’s already February, and we’re getting into an all-new earnings season.

This time of year is especially important for businesses and investors, because we’re getting some of the first important data releases from these companies while also hearing about their new plans for the year ahead. You can think of it like “Groundhog Day” for corporate America.

And when you dig deeper into the numbers, you’ll start to see the market’s making a bullish new pivot into uncharted territory.

Click the video below for the full story:

Welcome to Moneyball Economics, I’m Andrew Zatlin, and we are standing here at the beginning of February…

Traditionally, this is a very important time of the year for economists and investors alike because this is kind of like a Groundhog Day for corporate America. This is when they pop up and they signal, do they expect the year to be bright and sunny, or are they going to hunker down because they see gloom and clouds on the horizon?

We get visibility into what corporate America is thinking. and likely what they’re going to be doing in the form of quarterly earnings releases and economic data.

Right now it’s earning season and yeah, it’s backwards looking about what just happened, but that creates a little bit of positivity because past is prologue and at this time of year in this particular earning season, companies are also talking about what they expect for the next year.

We also get economic data starting to come out that relates to this year.

Remember last year, companies in the last quarter, they’re just kind of cleaning up, they’re hunkering down, they want strong profits, strong revenue, do whatever they can to make the results look super good, get those bonuses locked in. But you come to January and they’ve got net new strategic plans. Those strategic plans define how much they can spend, how much equipment they can buy, and how much hiring they’re going to do, and that’s based again off of their future expectations.

So we have, in the earning season, what companies say … and then in the economic data starting now, what companies are really doing. I believe that we’re going to see not just growth for this year, as I’ve been saying, you should be long and strong this year. I’m very bullish, but I expect it to be strong right out of the gate. That’s different from what mainstream consensus believes.

They expect that eventually things are going to ramp up. If I’m right and the data seems to say I’m right and reinforce my view, then consensus needs to make some adjustments.

And as we saw last week, when consensus has to adjust their view, it’s never smooth sailing. Last week, for example, fed governor was nominated. He’s a known hawk, which means more rate cuts might not happen. The markets didn’t like that they puked. Well, unfortunately, we are going to see a lot of growth this year. Rate cuts may not be out there, and so the markets need to adjust. It will be volatile in the near term.

Why do I think things are perking up? Well, let’s talk first and foremost about what we’re hearing in this earning season.

Right now, we’re only a few weeks in, but 75% of all companies that have reported had earnings surprises to the upside, they exceeded expectations.

That’s a phenomenal number by the way.

And when we’re looking at Q4 results, 12% year over year profit growth, that means margin expansion. In other words, all those layoffs, all the pullbacks last year continue to pay off in the form of more profits and better margins.

And looking at going forward this year, talk about bullish companies are expecting not the 12% they just had. They’re signaling 15% year over year growth each and every quarter going forward. And since they sandbag, you can expect it to be getting closer to 20% year-over-year growth.

This is signaling that companies are not just super profitable, not just getting great margin growth, but they also expect top line growth. They expect to enjoy a lot of economic activity themselves. So we’ve got the conditions right now where companies are profitable enough to hire more. They see the need to expand and they’re going to start expanding and spending.

This is a positive feedback loop that will just drive the economy up. That’s what they’re saying.

Is it leading into what they’re doing? Well, this is where things get a little bit more challenging because again, we’re a transitionary time of the year. The data we’re getting now is still kind of December focused and we’re starting to get some January data.

However, January is not really when companies ramp up. People are just now back from vacation just now getting into seats and stuff. They’ve got the plan and they’re starting to digest what it means. Actual hiring takes place in February.

So we’re kind of a month away from getting the real nitty gritty about whether companies really are stepping on the gas, but there are some signs that things are ramping up. For example, in the manufacturing space in December, things ramped up pretty fast. A lot of orders for the manufacturing space.

And again, this is what I’ve been saying, that manufacturing in the first quarter is going to be one of the first places that will perk up because they have to. Inventories have now reached a point where they’re too low, they have to restock equipment, equipment and machinery.

Purchasing has been super light this year and things break down. They have to be replaced. They’ve been holding back the reason that they suddenly went in December to start spending, not just because the demand is there because inventories are too low, not just because the machines are broken, but Trump and the big beautiful act that he passed that hits taxes. He restored 100% depreciation to companies. So if they bought it in December, they get to write that off last year’s books, a lot of incentives to go ahead and start basically a lot more manufacturing activity and we’re starting to see that in a variety of places.

Seeing it in the PMI data that’s now starting to come out for January. So we’re starting to see strengthening economic data a little bit, like I said, is a little bit challenging, not just because it’s old, it’s still primarily focused on December, but also we had this government shut down. It sent out some false signals because October, November we had a lot of external shocks to the economy. The government wasn’t operating.

So the fourth quarter, the signals are a little bit, well, they’re muddy, they’re not clear, but they’re not clear. Also for a second reason, keep this in mind. If you’re on a boat and you’re changing course, things get a little choppy.

And that’s exactly what the data has been signaling for a couple of months and we’ll probably signal another month or two is we’re not getting a clear uniform signal when the economy was doing really bad, say, over the summertime all the data points we’re signaling softness.

Now we’ve got some contrary conflicting data points, and that’s healthy. That is the sign of a transition.

We’re changing course, we are reemerging, the economy’s firming up some of the data lags or it’s unclear, but over time it’s going to strengthen and got my own data point that I like, like looking at temp hiring…

When you think about temp hiring at this point in a cycle where companies have gotten lean, the first thing they’re going to do, if they need to ramp up staffing, they’re not going to bring in full-time workers. They’re going to bring in temp workers. Maybe like I said, the manufacturing’s perking up, but is it sustainable? Maybe it’s just going to happen for a quarter that these inventory stockpiles need to get rebuilt. So you bring in temp workers. Well, I track hiring at major temp agencies such as Robert Half Manpower and Kelly Services.

And guess what? In the month of January, a surge in hiring, it’s moving back up for all three. So we’ve got a uniform signal that temp hiring you can expect in January to be moving up. And that means there’s a demand for more support because business activity is perking up.

Again, this is very different from what consensus expect.

We have been in an environment where consensus has been operating as good news is bad news. Bad news is good news because of this hyper focus on interest rate cuts, interest rate cuts, the markets love them, but we’re now transitioning to a new period and it’s going to define 2026. It’s “good news is good news.”

The markets have to make this transition, but ultimately where we’re going to be is that we’re going to continue to get this steady drumbeat of good news. And good news means companies are spending, they’re active, they’re profitable.

Valuations of stock prices will have to change and be bigger. So it’s great for the stock market. For the bond market, it’s not so great because again, this is not positive news for rate cuts, but again, the markets will adjust. You need to be bullish this year. The economy is growing right out of the gate, but right now we’re ahead of the curve and consensus is behind us and they’re going to catch up. And once they’ve caught up the opportunities, well, stock prices are going to move up pretty rapidly from here on out and you want to get in now. This is definitely a buy time.

We’re in it to win.

Zatlin out.