America Inc has survived the oddest year in modern times. What next?

BEFORE THE covid-19 pandemic investors favoured companies with strong sales growth, low debt and high return on assets. In the past three months, they have been ploughing money into smaller, underperforming firms that have barely survived the coronavirus recession. A robust economic recovery, Wall Street seems to think, will pull the most covid-impaired away from the abyss and towards financial outperformance. Right now, says Jonathan Golub of Credit Suisse, an investment bank, “the market is rewarding failure”.The bet on weaklings is the latest sign, if more were needed, that 2020 marked a weird year in corporate history. Far from imploding, as many feared after the virus clobbered stockmarkets in March, America Inc is looking astonishingly healthy. It did not take long for analysts to start revising their profit forecasts back up (see chart 1). Even then, four in five big firms that have reported their latest quarterly results beat projections. Their aggregate earnings exceeded estimates by nearly 17%.