That's because the economy has nearly returned to its pre-pandemic operating rate (capacity utilization), and people have a lot more money than they did a year ago.

As we discussed on Monday, disposable income is 13% higher than it was before the pandemic.  And the personal savings rate (at 20.5%) is more than double pre- pandemic levels, and more than double the average U.S. savings rate of the past sixty years.  And yet another couple trillion dollars worth of fuel is about to be poured onto the liquidity fire.

With that, when we get to first quarter earnings (and more so, second quarter earnings), we are going to see some huge positive surprises, as companies report against earnings of a year ago, when the economy was in various stages of lockdown. 

Q4 has already delivered big positive surprises.  Wall Street was looking for an earnings decline of 9% (compared to Q4 2019).  We're nearly through all of the reports, and earnings grew by 4% in Q4. 

With this, the Wall Street earnings estimates for 2021 have been dialed UP.  But these numbers will still be crushed.   For Q1, they're looking for earnings growth of 21%.  For Q2, growth of 50%.  That sounds like a lot.  But remember, these earnings will be measured against a very low base.  When things are broadly bad, corporate America will always "take cover" from a broad economic crisis, to manufacture lower earnings.  They did just that.