Taps Coogan – November 17th, 2022

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The following chart, via Isabelnet, highlights the fact that, despite the bear market rally of the last couple weeks, earnings estimates for the S&P 500 in 2023 point to new lows.

There has been much rejoicing about the better-than-expected inflation numbers that have been posted in the last month. After 10 months of bearish action in the market, that is justified and this bear market rally could continue for weeks or more. Nonetheless, inflation is dropping in large part because demand is weakening, hence the decline in profit expectations.

This what the lead-in to a conventional recession looks like: the Fed tightening as earnings drop, housing cools, yield curved deeply invert, layoffs start, etc…

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