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S&P 500 Earnings Estimates for 2023 Rise, It Won't Happen

Let's discuss rising S&P earnings estimates and why they won't happen.
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S&P 500 Earnings Estimates

Tweets of the Day


Which One Of These Does Not Fit In ?

  1. S&P earnings estimates for 2022(e) have increased from $200.03 to $226.62 and 2023(e) have gone from $246.79 to $248.30. Earnings estimates jump 9.75% vs 2022.
  2. Fed hiking at the fastest pace since the 1980s
  3. CPI up 8.5% from a year ago
  4. 30-year mortgage rate 5.41% vs 3.12% a year ago.
  5. Just in time manufacturing morphs into supply hoarding
  6. War in Ukraine disrupting shipping channels
  7. European energy crunch 
  8. Falling stock market
  9. Demand Destruction
  10. Recession

Earnings Estimates 

I wrote about this a bit yesterday in If You Think I'm Bearish Please Read John Hussman without recalling that earning estimates went up or having seen the Tweets by Bill Gurley.

The hook now is looking at declines and thinking along the lines of "stocks are down 15% so they are cheap."

Stocks on average will not be cheap if the S&P declines 50% from the top. 

If the S&P declines 70% then we can discuss cheap Both fiscal and monetary policy goosed earnings. That is why Shiller uses CAPE (cyclically-adjusted PE) ratios and Hussman uses MAPE (margin-adjusted PE) ratios.

Earnings mean revert.

Most of the forward earnings are total nonsense. They do not reflect higher inflation, higher interest rates, or trade flows which looking ahead will increase costs. 

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The Hook 

Nonsensical earnings estimates, ridiculous forward PEs, and thinking things look cheap following big declines  are all part of the hook. 

This post originated at MishTalk.Com.

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