Get set for the earnings crash

The Market Ear sums it well.

—

The latest Atlanta Fed GDPNow model reading for Q2 is clinging to positive territory, at a +0.3 percent estimate as of Monday’s update.

Data Trek: “recent readings have been disappointing and awkwardly close to negative. Let’s not forget that Q1’s GDP has been revised to -1.5 percent. With “recession” chatter now everywhere, GDPNow is saying we are close to hitting the 2 quarters of negative growth definition of the term. Close, but not there yet…”

Data Trek

More concern about growth and recession risk

The current sell-off shows the market is becoming more concerned about growth and recession risks.

Goldman

Activity indicator turns negative in June on both sides of the pond

Preliminary June CAI (Current Activity Indicator) turns negative in the US and Germany.

Goldman

Will the poor breadth actually translate into lower earnings…?

Earnings revision breadth falls into negative territory.

Morgan Stanley

Only energy holding numbers up

1-month revision to I/B/E/S consensus earnings. MSCI World sectors, other global equity index aggregates.

IBES

“World” estimates heading lower

2022 consensus earnings expectations over the past 12 months.

IBES

Heading for a fall

Consensus earnings estimates have stopped rising, but have not yet started to decline.

FactSet

Consensus expects S&P 500 profit margins to expand in 2023

Goldman calling bull on those 23 margin estimates. Bull shit that is. GS: “Analyst estimates show S&P 500 profit margins climbing to new highs in 2023. Despite tightening financial conditions, persistent input cost pressures, and slowing revenue growth, analysts continue to forecast a rise in profit margins next year. Excluding Financials and Utilities, analyst estimates show aggregate S&P 500 net profit margins expanding by 30 bp in 2023. The median stock is projected to grow net margins by 60 bp to 14.5%”

Goldman

Guess what? Margins contract in recessions

S&P 500 profit margin contractions in historical recessions.

Compustat

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:

$24.99 / month

$249 / year

Cancel at any time through our billing provider, Stripe

Share

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.