Control Panel: Earnings estimates

Earnings Estimates Are Rising, a Welcome Sign for 2023 Market Rally

Stock advances have surprised many investors, partly because expectations for company earnings hadn’t kept up


Karen Langley, The Wall Street Journal, Updated Sept. 10, 2023

Wall Street expects corporate earnings to rebound after three quarters of year-over-year declines, a development that could put the stock market’s faltering rally on firmer footing.

When the next reporting season kicks off in earnest in October, analysts estimate that companies in the S&P 500 will show that profits inched up 0.5%, helping deliver a 1.2% increase for 2023, according to FactSet…

Climbing profits would be a welcome development after a period in which the stock market’s gains far outpaced anticipated profit growth. The S&P 500 has risen 16% this year, even after falling in four of the past six weeks.…[end quote]

This rah-rah article seems to make an assumption that earnings estimates will be accurate. Even if they are, the profits of S&P500 companies are expected to be far below the increase in stock market prices.

The Shiller CAPE is still near a bubble high.

The CME futures market believes that the Fed will hold the fed funds rate steady or raise it by 0.25% during the rest of 2023. The fed funds rate is an overnight rate. The longer-duration Treasury yields have been rising. Those are determined by the bond market since the Fed is gradually shedding its book, not buying. The longer-term yields impact mortgage and corporate bond rates as well as consumer interest rates.

The Fear & Greed Index is neutral. The market is risk-neutral.

USD and oil are in rising trends. Natgas is stable.

It’s hard to tell whether the stock market drop of the past month is noise or the beginning of a durable setback. With money market funds yielding over 5% and the 10YT over 4% (risk-free) there is a real alternative to stocks.

The METAR for next week is partly cloudy. There is no news that would cause a break in the markets.


We are just in the first inning. Jeff Greene.

This can stretch over the next 12 to 24 months.

I was hoping for a rush job. I am not seeing it at this point. While the first blowups have happened in China that is not washing ashore here.

We need a Leman Brothers moment in here soon or this will stretch out a lot longer. I was seeking now. Now is now iffy for a meltdown reaching into the winter of 2024.

Markets will certainly make note of this week’s CPI and PPI data releases concerning August inflation. I doubt these news items will break markets, but they may move the markets.

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