Prices and earnings. 2 bifurcating subjects that have baffled investors and money managers since the start of 2015, exactly when the Fed ended its QE program for good (coincidence or trigger?). For almost 2 years now, the correlation between forward earnings expectations and the broad market have broken down almost idiosyncratically.
More current developments have caused both prices (S&P 500) and consensus earnings expectations to go practically nowhere but in circular gyrations.
While the U.S. corporate sector is technically already in an earnings recession, equity prices have not caught down to the earnings-implied fair value, which makes us wonder how much more of the technical driven (short covering) rally there is left in the tank.
Tread wisely.
More current developments have caused both prices (S&P 500) and consensus earnings expectations to go practically nowhere but in circular gyrations.
While the U.S. corporate sector is technically already in an earnings recession, equity prices have not caught down to the earnings-implied fair value, which makes us wonder how much more of the technical driven (short covering) rally there is left in the tank.
Tread wisely.