Earnings are back, but Wall Street's guidance game? Maybe it's gone for good

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They say never let a crisis go to waste. For critics of short-term financial guidance, which companies halted during Covid-19, the market rally into earnings season makes the case that quarterly forecasts can stay away.

There are significant forces in the market that disagree, and the battle has been waged in public testimony and comment letters to policymakers for years. Hedge fund advocacy group Managed Funds Association wrote in a lateabout proposed elimination of quarterly reporting, not just guidance, "Private fund managers believe that the existing quarterly reporting framework under the Exchange Act has worked well.

You want companies to always manage to the long term, but if they can't call the next three months, how can you have confidence in the next three years?Wall Street analysts remain dubious about any long-term shift in guidance caused by the coronavirus. Ives said there may be a price to pay for management teams that permanently remove guidance, even if it is not being felt today as stocks reapproach records.

He said the relative value of shorter-term guidance does depend on the specifics of a sector, but to not give guidance going forward is going to be a hard case to make across all parts of the market. "You're talking about a once-in-a-century uncertainty. It is going to continue for six months and beyond.

 

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So, basically Vegas.

Easy to sit home and use the money you DO have to invest. The Stock Market is NOT The Economy. I cheer it on, of course, but Main St. is still suffering at a gut level. R Senators, stop dragging your feet.

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