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.
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.
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.
“World” estimates heading lower
2022 consensus earnings expectations over the past 12 months.
Heading for a fall
Consensus earnings estimates have stopped rising, but have not yet started to decline.
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%”
Guess what? Margins contract in recessions
S&P 500 profit margin contractions in historical recessions.
Houses and Holes

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