 |
| President Donald Trump said on Sunday that he will be announcing a new Federal Reserve governor and Bureau of Labor Statistics commissioner over the next few days. Anna Moneymaker via Getty Images |
President Donald Trump has set his sights on a long-standing Wall Street tradition: quarterly earnings reports. On Truth Social, Trump suggested that US companies should only be required to release results twice a year instead of every three months.
He argued the change would reduce compliance costs for businesses and allow executives to spend more time running their companies rather than preparing for the next earnings call.
But while the proposal may sound appealing to corporate leaders, analysts and market insiders warn it could have unintended consequences — particularly for investors and for Wall Street’s trading machine, which thrives on the volatility earnings reports create.
A Long-Running Debate
The question of how often companies should report earnings isn’t new. In fact, Trump floated a similar idea in 2018. High-profile executives such as Larry Fink of BlackRock, Jamie Dimon of JPMorgan, and Warren Buffett have also criticized the earnings cycle, saying it encourages short-term thinking.
However, their critiques have focused on the practice of providing forecasts — forward-looking projections that can spark wild swings in stock prices. Many argue these outlooks push management teams to chase quick wins rather than sustainable growth.
By contrast, Trump’s proposal would reduce the number of mandatory disclosures entirely, raising concerns about transparency. For professional investors with access to expensive datasets, the change might be manageable. But for retail investors, who rely heavily on public earnings reports to make informed decisions, the risk is much greater.
Why Wall Street Loves Earnings
Despite the headaches they cause for companies, quarterly earnings reports are a profit engine for Wall Street.
Banks, broker-dealers, and stock exchanges earn substantial fees from the surge in trading activity around each report. A big earnings beat or miss can ignite a frenzy of trades, generating millions in commissions and spreads.
Earnings forecasts, though often criticized, only add to the activity. They provide more reasons for investors to buy, sell, or hedge positions. Without these regular catalysts, trading volumes could shrink — undermining one of Wall Street’s most reliable revenue streams.
One CFO put it bluntly: “Quarterly earnings might be painful for management, but they are oxygen for trading.”
The NFL Injury Report Analogy
To illustrate the stakes, consider the NFL. Coaches have long hated the requirement to disclose player injuries, arguing it gives away strategic information. Bill Belichick even kept Tom Brady on the injury list for years despite his clean bill of health.
Yet the league insists on public injury reports. Why? Because sportsbooks and betting markets need accurate data to set lines. Without it, confidence in the entire system would collapse.
The parallel with Wall Street is clear. Just as injury reports fuel the sports betting ecosystem, earnings reports fuel the financial markets. They may frustrate executives, but they provide critical information that investors rely on to trade — keeping the market liquid and functioning.
What’s Next?
If Trump’s proposal gained traction, it could reshape the way markets operate. Companies might welcome reduced scrutiny, but investors — particularly smaller ones — would be left with less timely information. Meanwhile, Wall Street firms that depend on quarterly earnings volatility could see one of their most profitable engines stall.
For now, the idea remains just that: a proposal. But it highlights the constant tension between corporate efficiency and market transparency — and the delicate balance needed to keep America’s financial system running smoothly.
