So far, earnings are showing the first quarterly declines in years while the markets have quietly broken out to new all-time highs. How can bad news bring good markets? For one, volatility has settled down to levels last seen during the summer of 2018 and secondly, the news has not been filled with market-moving headlines. Many investors welcome this as a time to relax while some pundits preach “the end is nigh”. Regardless of one’s view of what is likely to happen next, corporate earnings are the next market moving catalyst on the radar. So far, earnings season has been right in line with what most analysts were expecting. As of April 26th, 46% of companies in the S&P 500 have reported for the current quarter. Of those, 77% have reported a positive earnings surprise while 59% have reported a positive revenue surprise. The blended earnings growth rate is a -2.3% which, if it remains, would mark the first year-over-year decline since Q2 2016. On an absolute basis, these numbers aren’t the type one would expect to drive markets to new all-time highs, but on a relative basis they are better than lowered expectations.