AXA IM: What Was The 2018 Buzzword Of The Year In US Company Reports?

Current affairs impact means 'tariffs' takes our 2018 word of the year spot

Political and regulatory developments are rapidly becoming increasingly prominent in these reports. We think this reflects the changing mood in the market as companies struggle to emphasise their individual 'growth stories' against this backdrop of important external events.

For example, the introduction of tariffs on metals, washing machines, solar panels and goods from China during 2018, means trade policy has come to the fore. This is a major change in the operating environment for many US companies, and explains why we choose 'tariffs' as our word of the year.

Technology: nothing new?

2017 saw a breakthrough in the number of mentions for new technology such as artificial intelligence, the Internet of Things and so on. 

While these themes have been sustained in part this year, we have also witnessed a slowdown in the amount of new technologies being talked about.

One exception: blockchain, bitcoin and cryptocurrency saw a big jump in mentions in the first part of the year.

Nonetheless, we observed mentions peaking in Q2 2018 which have since been falling as the hype (and exchange rates) around cryptocurrencies have receded towards the end of the year.

Brexit exhaustion?

It is fair to say that most of us, apart from a few diehard politics nerds, are growing tired of the discussion of the important issues around Brexit.

US companies are no exception: we saw much less discussion of Brexit in 2018 (mentioned in 114 meetings) than in 2017 (338) or 2016 (553).

Back to the future?

Our research found that companies are increasingly shifting the balance and discussing recent results less, and future prospects more. 

This is despite the earnings call providing a crucial way for company management teams to explain financial performance. Words including 'expected' and 'forecast' have become more prominent in the dialogue.

Companies' tone has remained optimistic, but imprecise: companies increasingly like to describe their outlook with growth rate approximations (imagine statements such as "We expect high-single digit sales growth next year"). Indeed, 'high-single digit' has outstripped 'low-single digit' as a forecast range.

Happy New Year? Maybe for managers…

Over the past 15 years, we have seen a rapid growth in the number of mentions of 'happiness' from executives.

Bur conversely, we also found that company executives are not often keen on sharing their happiness at this time of year, and rarely make seasonal greetings ('happy holidays' and so on).

By contrast, we also noticed less expression of happiness from the analysts that participate in these conference calls. We hope that they find some cheer in 2019.