Earnings Are Blooming

We don’t expect any recession this year that the Fed would have to address by easing. But since some investors think that may happen, the Fed Put is back. With it comes increased risk of a stock market meltup. For perspective, we recap the three ways that recessions typically are triggered. … When recession risk is low, as now, S&P 500 forward earnings are well correlated with actual earnings as well as with the Index of Coincident Economic Indicators. Both forward earnings and the CEI index rose to record highs last week.