Welcome to the blog series “Navigating Earnings Season.” In this series, I dive into the world of earnings reports from major companies, spanning giants like JP Morgan and Pepsi, as well as niche players in various sectors. As the earnings season unfolds, these corporate outlooks offer real-world insights that often contrast sharply with the uncertainty emanating from the Federal Open Market Committee (FOMC).

Every earnings season has its own unique set of expectations and realities. Coming into this earnings season, one of the most intriguing questions was how well the consumer-facing companies would be able to maintain their pricing power. Pricing was the primary driver of the revenue equation for successful companies over the past two years or so. But the new algorithm for success is a bit more complicated than “raise prices by x.” The requirement now is maintaining or expanding pricing less aggressively and recovering lost volumes. More complicated but potentially more rewarding.

Coca-Cola got the memo with a rather significant caveat. Not only did Coca-Cola increase volumes (otherwise known as concentrate sales), but pricing was also a robust 9%. Granted, much of that pricing was generated in places with inflation issues. But—putting that aside—the quarter showed the power of what happens when previous pricing power meets better volumes.

The improvement in Coca-Cola’s margins was notable for a couple of reasons. Coca-Cola operates a global business that is—to a degree—at the whim of the strength or weakness of the U.S. dollar. More importantly, there was an uptick in marketing spend. After all, it is difficult to regain volumes without spending some of the pricing-generated margin dollars on marketing. As the U.S. technology platform earnings roll in, it will be interesting to see how the increased marketing spend from the consumer-facing companies has flowed through to “Big Tech.”

Then there is Unilever (with products from Hellmann’s to Dove soap). Volumes have begun to pick up. Pricing has held up. And margins have expanded. That is the essence of the current environment. Pricing has decelerated meaningfully—from more than 8% to 1% in a year. But that doesn’t matter for bottom-line performance. Previous pricing is today’s margin.

To be clear, this dynamic is not limited to a few companies selling sugary beverages, mayo and soap. The dynamic is also apparent in companies that should be facing significant headwinds. Enter Sherwin-Williams, which—given the rampant headlines surrounding the challenged housing market—should be struggling to generate worthwhile earnings reports. That is not the case.

Sherwin-Williams raised prices as its input costs increased. Then input costs went down, Sherwin-Williams held its pricing, and volumes began to creep back. And this is happening in a low-turnover housing market that has, at best, seen fits and starts. It is worth contemplating what happens if the housing market becomes a tailwind instead of a headwind.

This is why earnings season is always a bit of a “narrative” check. It is easy to get stuck on headlines about a slowing economy, a fading consumer and whatever else might arise. But those broad statements do not (necessarily) equate to the health and trajectory of corporate earnings. Sometimes, the saying “the stock market is not the economy” is worth repeating. This is one of those times.