Earnings season is in full swing, with 20% of the S&P having already reported and another 34% of companies posting numbers this week. Thus far, revenues have come in weaker than expected, as only 44% of companies have beaten revenue expectations versus the long-term average of 62%. While 70% of the companies have beaten earnings estimates, the argument can be made that many of these beats are low quality in nature, as they are not driven by strong top-line growth. Looking across the corporations we follow closely, our thesis that we are in a bond-pickers market is taking shape. No longer can sector or industry alone be relied on to provide positive performance. An example is the tech industry, where credits such as Intel have experienced revenue and profit declines (1Q revenue and operating income fell 2.5% and 20%, respectively), causing credit spreads to widen 20 basis points YTD. Others such as EBay and Google are growing profits by double digit percentages, and as such, credit spreads on their bonds have fallen YTD. We are pleased that the market is distinguishing strong from weak credits and expect the trend to continue, providing the opportunity for outperformance if the proper diligence and research is conducted.