From Lu Wang at Bloomberg:
The potential for politics to ruin everything was on the mind of Ray Dalio, the founder and co-chairman of Bridgewater Associates, in an essay published yesterday on LinkedIn. They will probably play a greater role in markets than any time in our lifetimes, he wrote.
“While I see no important economic risks on the horizon, I am concerned about growing internal and external conflict leading to impaired government efficiency (e.g. inabilities to pass legislation and set policies) and other conflicts,” he wrote.
Economically, it was a stellar quarter for profits. Operating income in the S&P 500 rose 11 percent, building on a 14 percent increase in the previous three months for the first back-to-back gains exceeding 10 percent since 2011. Companies surpassed estimates by almost 1 percent on the sales line and 4.5 percent in profits, among the higher beat rates of the bull market.
You wouldn’t have known it in the market. S&P 500 companies fell an average 0.6 percent the day after announcing results, data compiled by Bloomberg show. Individual stocks also sat still after the release of better-than-estimated results, the first time since 2000 that positive surprises were not rewarded, according to Bank of America Corp…..