US Budget Deficit, Reporting Season, India

The earnings season starts off next week when major banks and several other companies release their first quarter results. According to Refinitiv, S&P 500 earnings in the first quarter are expected to rise up to 24.2%. And although analysts expect excellent financial data, it is far from certain that stock prices will rise. The fact is that in the last quarter, a number of companies, against the backdrop of good financial data, lost in capitalization on the reporting day.

The markets are now focusing on the positive and expectations of a bright future. However, at any time they can switch to one of the three Achilles heels of the US economy, the so-called triple "D": national debt, budget deficit, and trade balance deficit.

Markets faced at least two of those Ds this week. The US trade deficit showed a new all-time high. And just yesterday, the Congressional Budget Committee noted that the federal budget deficit has already reached $1.7 trillion in the first six months of FY 2021. And it's higher than any full annual deficit until 2020. Moreover, in March, the deficit amounted to $658 billion (this is the same as the entire deficit in 2016).

So if analysts and the markets in general decide to remember these issues, then they will have plenty of reasons for concern.

India, meanwhile, is sinking deeper into pandemic hell. The number of new infections rose up to more than 126,700 per day. Considering that India is one of the most densely populated countries with the least ability to organize social distancing, there is every reason to expect further deterioration of the situation. In fact, investment bank Goldman Sachs has already cut its forecast for India's growth for the April-June quarter.