We are halfway through the first quarter 2021 earnings season, with 51% of companies having reported in the US.

The delivery of results is very strong, supported by a reversal of pandemic and baseline effects. Despite already elevated projections entering the quarter, a record number of companies are beating consensus estimates.

If at the beginning of this earnings season the S& P500's combined EPS was expected to be US$23.4 per share, that number is now at US$34 per share.

86% of reporting companies exceed EPS estimates. EPS growth for these companies is +57% y-o-y, which surprises positively at 24%. Discretionary, Financials and Materials are the main drivers of strong EPS growth.

Revenue growth is coming in at +11% year-on-year, which is positively surprising at 4%.

We believe these results should keep concerns about market valuations at bay, as we continue to see upside risk to earnings in subsequent quarters, consistent with global GDP growth of around 6% in 2021.

In fact, the market today incorporates a 28% growth for the combined earnings of the S&P 500 for 2021, which in the month of April alone and due to the positive Q1 earnings season, have been corrected upwards by 10%. Global GDP growth of 6% should be consistent with earnings growth closer to 35%.