Excerpt from Bloomberg quoting DataTrek’s Nick Colas:
…. “And yet, although stocks have experienced unprecedented volatility in recent weeks, plummeting into the fastest bear market in history, one thing is becoming clear: Investors are optimistic that the earnings power of U.S. companies has only been temporarily impaired. At Monday’s close of 2,237, the S&P 500 Index was trading at 19 times the benchmark’s average earnings per share of $122 over the past decade, according to DataTrek Research.
It’s a safe bet that earnings won’t meet that average in 2020 given the steep contractions in the economy being projected, “but markets think we’ll get there in the next year or the year after,” DataTrek co-founder Nicholas Colas wrote in a research note. That’s a tremendous vote of confidence in America, but is it realistic? After the financial crisis, Colas notes that it took just 12 months, or until the first quarter of 2010, for earnings to return to their pre-crisis normalized levels. It took another 18 months for earnings to reach a new highs”….
Read the full article here on Bloomberg!