Can you spot a trend on the chart below? S&P500 earnings growth is decelerating, and the trend is clearly downwards. March 2021 is an outlier due to comparisons with the pandemic quarter of March 2020, and the worst part is that the consensus for the 3rd and 4th quarter of 2022 will need to be adjusted downwards if things don’t change substantially for the better. On top of that, since the credit markets are not as sound and fluid as they were in the past few years, buybacks cannot be financed issuing cheap debt anymore, and cash flows are getting slim. Equity investors need to find creative ways to be bullish these days.
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Source: WSJ, Refinitiv.
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