14 Dec CORPORATE BEIGE BOOK-Upbeat As Expected

Companies remained generally upbeat during the third quarter earnings season, based on the LPL Research Corporate Beige Book Barometer. This is hardly surprising, given actual earnings results were good again and estimates of future earnings held up relatively well as companies provided forward-looking guidance.

POSITIVE SENTIMENT CONFIRMS EARNINGS STRENGTH

Corporate sentiment remained very upbeat during the third quarter based on our count of positive and negative words in earnings conference call transcripts. We observed a pickup in strong words, little change in the number of weak words, and a resulting increase in the differential between strong and weak words, which remains very positive [Figure 1]. Accordingly, the ratio of positive-to-negative words continued its steady climb since the end of the China and oil-driven downturn in spring of 2016 [Figure 2]. Specifically, from the third quarter of 2016 to the third quarter of 2017, the ratio of strong-to-weak words rose steadily from 2.6 to 7.1.

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