Excerpt from Bloomberg’s latest piece quoting DataTrek Research:
….. “On Friday, the government is forecast to say gross domestic product expanded at a 3.3 percent rate in the third quarter. While that is slower than the 4.2 percent pace in the second quarter, it’s still higher than anything seen since 2014. But here’s the thing: Companies are reporting earnings that are beating estimates by a smaller margin (3.9 percent) than over the past year (5.4 percent) or five years (4.6 percent), according to DataTrek Research. That simply won’t do, with the S&P 500 priced for perfection at a lofty 21 times earnings coming into the month. “If U.S. companies can’t blow away the numbers when domestic GDP is growing at (greater than) 3 (percent), when exactly will they?” DataTrek co-founder Nicholas Colas wrote in a research note Tuesday. “Markets have spent the last two years discounting earnings-boosting tax cuts and fiscal stimulus. Now the story changes to more sustainable growth, which is a different calculus”…..
Read the whole article here on Bloomberg!