Looking Forward To Better Earnings

Check out the accompanying pdf and chart collection. Executive Summary: Our analysis of forward earnings—a good indicator for actual earnings over the next four quarters—suggests an April bottom. That jibes with our mid-cycle-slowdown thesis. … Many who expect a recession instead have been misled by the LEI’s recession signaling. The LEI overrepresents the weak goods side of the economy and underrepresents the strong services side that’s been keeping the economy afloat. … We think the forward profit margin, like forward earnings, has bottomed; margins have been improving for all but three S&P 500 sectors. … And: Still no credit crunch from the banking crisis. … Also: An update on bond market indicators.