Are We About To Enter an "Earnings Recession"?

Excerpt from Louis Navellier's Marketmail - 3/12/2019

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The bulk of fourth-quarter earnings have been announced and the average stock has posted a 5.7% sales increase and a 14.3% earnings increase – the fifth straight quarter of double-digit earnings growth.

Despite that great news, the S&P fell 2.16% last week as CNBC kept warning about a coming “earnings recession.” They are referring to the analyst community’s forecast that first-quarter 2019 S&P 500 earnings could decline 2.9%, due largely to more difficult year-over-year comparisons. Specifically, FactSet is expecting that only four of the 11 S&P sectors will post positive earnings growth in the first quarter, namely Healthcare (up 5.4%), Utilities (+3.9%), Industrials (+3.1%), and Real Estate (+1.9%). 

However, 2018 was a year of 24% earnings growth and a 6% decline in the S&P 500, so a year of flat earnings may not impact the market that much. Maybe the late 2018 correction reflected the anticipated drop in 2019 earnings growth, so the market may now look forward to 2020 earnings more than 2019.

In This Issue of Marketmail (Click Here to Read)

We finally had a down week in 2019, so the doomsday stories have dominated the media. First, there’s the very real threat of Brexit and a European recession, but Bryan Perry doesn’t think this will impact the U.S. market much. Then there’s the political nonsense of the Green New Deal and the latest “end of the world” rhetoric in America, which Gary Alexander debunks. Ivan Martchev revisits the China “miracle” of a levitating market with deteriorating fundamentals, which can’t go on forever. Jason Bodner has been warning of a correction in this “overbought” market and is glad it has arrived, but history tells him to look for higher prices ahead. Then I’ll close with a look at the U.S. vs. Europe. Bottom line, there are problems in Europe and China, but the U.S. remains the oasis – with a strong currency, stock market, and economy.

Income Mail: Recession Inertia is Building in Europe 

     By Bryan Perry

European Growth Forecast – “Look Out Below!”

Growth Mail: The Sky is Falling…Again

     By Gary Alexander

Is Today Really “The Most Divided” America Has Ever Been?

Global Mail: The Trade Deal is a Trigger to Sell China 

     By Ivan Martchev

The Economic Cycle Cannot Be Eliminated

Sector Spotlight: This “Overbought” Market Finally Corrected

     By Jason Bodner

The First Week of Lower Prices in Most Sectors in 2019 

A Look Ahead: Can We Sustain 3% GDP Growth in 2019?

     By Louis Navellier

In Contrast, Europe is Struggling