Says Paulsen, “even major economic slowdowns are often preceded by weakness in earnings estimates,” noting that in October 2014 estimates were lowered ahead of March 2015’s peak in annual real Gross Domestic Product growth. He points out that earnings estimates typically decline before recessions or major economic slowdowns as they did in October 2000 before the recession of March 2001 in September 2007 ahead of the recession in December 2007 and in September 2018, long before the recession in February 2020. Landing on the flip side of that argument is James Paulsen, chief investment strategist at the Leuthold Group, a Minneapolis, Minnesota-based independent provider of investment research and money management services. She anticipates a deceleration in earnings, with growth trending toward zero or below in the next three to six months. Now there are early signs that those same analysts are starting to revise expectations. Analysts often miss turning points in the economy and markets as they did in 20. If an earnings recession does materialize, equities may have another leg down, perhaps another 5% to 8%.” Expectations Set For DisappointmentĮstimates “need to come down to reflect the reality on the ground,” Tunkel says. Her view: “There is a high likelihood of an earnings recession, even if an economic recession is unlikely over the next 12 months. equity strategy, at BCA Research, a Montreal-based provider of independent global investment research and advice. Whichever view turns out to be correct, investors should buckle their seatbelts, it could have a big impact on where the stock market goes next.Īmong those thinking overly optimistic earnings forecasts could pose a problem for the market is Irene Tunkel, chief strategist, U.S. That might mean a recession isn't on the horizon. In the other camp is the view that corporate earnings are healthier than might be expected given the economic headwinds. Some in the market see that development as setting the stage for earnings disappointments that could drive stocks even lower.
0 kommentar(er)
