Yet, the equity market is only up 1.5 % since reporting season began two weeks ago, basically for three reasons:
Revenue growth, for the most part, is still lagging.
Second, guidance has been decidedly mixed – in Bernankian, ‘unusually uncertain’.
Third, according to a USA Today poll, 80% of the economics community has cut GDP growth forecasts to an average of 2.5% for the rest of the year from the 3% call in April – not to mention that over 80% of the economic indicators over the past month have come in below consensus estimates – so the quarterly earnings numbers are not capturing the extent of the slowing that is occurring in the economy.
D. Rosenberg