U.S. flags hang at the New York Stock Exchange. Photo: Reuters, Andrew Kelly

Morgan Stanley comments in a letter to clients:

“Earnings are what drive equity markets and earnings can often move opposite the direction of economic growth in the short term. That’s because earnings cycles are determined by many things that have little to do with the economy—product innovation, cost management and mergers, to name a few.

“Our bullish view has been predicated on earnings growth surprising to the upside this year. Indeed, with 60% of the S&P 500 companies having reported so far, the first quarter is proving to be the fastest period of sales and earnings growth in five years, with some of the best breadth across industries. This leads me to conclude ‘we don’t need no thought control’ from the media or anyone else telling us it’s all about to come crashing down. “