This post below from FactSet, which I think put out some of the best straight forward stats, outlines the main concerns of the companies in the S&P 500 who have already reported earnings (25 in total). They went through the earnings reports and searched for key words that signaled fear. The strong Dollar/FX was the largest concern but some of the other fears are worth noting.  While 25 is a small sample size of S&P companies it does lead me to believe that companies would be under greater pressure if the dollar continues its breakout.

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While the majority of S&P 500 companies will report earnings results for Q3 2016 over the next few weeks, 5% of the companies in the index (25 companies) have already reported for the third quarter. Given the number of concerns in the market, have these companies discussed specific factors that had a negative impact on earnings or revenues for the third quarter during their earnings conference calls?

To answer this question, FactSet searched for specific terms related to a number of factors (i.e. “currency,” “China,” etc.) in the conference call transcripts of the S&P 500 companies that have already conducted third quarter earnings conference calls through October 7. FactSet then looked to see if the company cited a negative impact, expressed a negative sentiment (i.e. “volatility,” “uncertainty,” “pressure,” “headwind,” etc.), or discussed clear underperformance in relation to the factor for either the quarter just reported or in guidance for future quarters. The results are shown below.

Similar to previous quarters, the stronger US dollar has been cited by the most companies (15) to date in the index as a factor that either had a negative impact on earnings or revenues for Q3, or is expected to have a negative impact on earnings and revenues in future quarters. These companies cited Canada (three), Mexico (three), UK (two), Brazil (one), and Korea (one) for having currencies that weakened relative to the US dollar in Q3 2016.

It is interesting to note that three of these 25 companies expressed a negative sentiment regarding the upcoming US election for president.

Election Uncertainty

The presidential election received three mentions in the conference earnings calls that have happened so far. Here are some relative excerpts discussing the potential ramifications of the election:

“I think there is just great uncertainty as to what’s going to happen in the US in particular as a result of the outcome of the election. It goes without saying that people are sort of trying to decide who to choose and what the impact will be on the economy, and I think people are maybe just hunkering down a little bit…And I think once we get through the election and then that uncertainty is removed, hopefully the market will find some momentum.” –Yum! Brands (October 6)

“This year’s presidential election in the US and events such as UK’s referendum vote to exit the European Union continue to create uncertainty and volatility. This uncertainty and volatility always has the potential to affect consumer and business sentiment, which in turn could negatively impact global economic activity.” –Acuity Brands (October 5)

“Also, we’ve anticipated a bit of an election slowdown. And historically, there’s always been a little fall off in booking volumes around election time. And so there could be some of that.” –Carnival (September 26)

Read more about earnings trends in this edition of FactSet Earnings Insight. Visit www.factset.com/earningsinsight to launch the latest report.