Analysts have been pushing down earnings growth expectations for Q2 earnings season, which kicks off in the next few weeks.
An interesting post by Ed Yardeni makes the case that forward earnings estimates still look quite bullish, at $111.26 for the S&P 500. Forward earnings is a time-weighted average of current and future year earnings.
One particular part of the post caught out eye:
“Forward earnings is an excellent leading indicator of actual earnings when the economy is expanding. Industry analysts don’t see recessions coming and tend to lower their estimates as the economic news worsens. So forward earnings is actually a lagging indicator during recessions.”
So despite analyst’s relatively bullish outlook, they’ve tended to be slow to see recessions. Follow this particular bull case at your own risk.