In this week’s message we said the following about a potential headwind developing from forward outlooks this earnings season: 

 “While Q3 earnings reports will reflect the strong profits that come with strong business conditions, I expect that they will be marred notably by uncertain outlooks due primarily to global trade concerns, which will exacerbate the otherwise typical inflation concerns that accompany a mid/late-stage economic expansion.”

Right out of the gate last night PPG (granted, just one company so far) confirmed our suspicion: per Bespoke Investment Group

“Last night, PPG Industries (PPG) lowered guidance for the quarter citing factors like rising input costs, weaker demand from the auto sector for its paints, softening demand from China due to trade tensions, the stronger dollar hurting foreign demand and weakness in emerging markets.  If you were to sum up all of the concerns that investors have that could possibly have a negative impact on company results in Q3, PPG mentioned them!”

Of course, to the extent that trade is an issue, as we also said this week, there’s time (conditions) yet to see the market rally markedly on an alleviation of the U.S./China trade battle: That would be the U.S. abandoning the trade-deficit narrative, and finding a better way (than tariffs) to deal with legitimate China issues (read IP theft).