| CEO non-confidence |
| CEO confidence would say that earnings estimates need to fall |
 Morgan Stanley |
| Investor non-confidence |
| Optimism on global growth falls to a new low. Net % of FMS investors expecting a stronger economy fell to -73%, lowest since 1994. |
 BofA Global Fund Manager Survey |
| How will corporates guide in Q2? |
| Company guidance is more cautious. Will poor guidance finally be the catalyst for 2H and 23 numbers to be slashed? |
 Barclays |
| Stocks have front-run (eventual) earnings weakness |
| 6m equity returns have decoupled with EPS revisions. What if negative earnings revision never materialize? |
 Barclays |
| Next shoe to drop? 2H earnings estimates |
| The curious case of the ultra-stubborn 2H earnings estimates…Data Trek: “Q3 and Q4 S&P estimates remain well above both Q2 forecasts as well as the trailing 4-quarter average, at $59.64/share and $60.95/share respectively. Despite all the macro uncertainties over the last 6-8 weeks, Wall Street’s Q3 and Q4 aggregate S&P 500 earnings estimates have barely budged. Their highs were the week of April 22nd, at $59.81/share and $61.12/share respectively. They remain within 1 percent of those levels today and last week saw the Street increase its Q3 estimate by $0.14/share even as it cut its Q4 number by $0.03/share” But remember the complication here (and be careful of what you wish for as a bear…): once sell-side does start to cut numbers, market lows cannot be far behind. |
| Next leg lower due to lowered earnings estimates? |
| Goldman expect further downward revisions to consensus earnings estimates. GS: “Bottom-up consensus typically overestimates EPS growth prospects and then cuts forecasts over time. Post-recession recoveries are notable exceptions when analysts raise estimates. This historical pattern also describes the last several quarters. Revisions were strongly positive in 2021, but during the last two months S&P 500 EPS estimates for 2Q-4Q 2022 have slipped by -0.2%, and -2.5% excluding Energy. Margins have driven the majority of recent analyst cuts, but estimates still appear too high. We expect S&P 500 net margins excluding Financials and Energy will slip from 12.7% in 2021 to 12.6% in 2023, but consensus expects a 30 bp rise to 13.0%. Our base-case 2023 EPS forecast is $239, 5% below consensus of $251” |
 Goldman |
| Binky on if estimates are too high |
| Binky Chadha at Deutsche is digging in to where there is earnings risk given the fact that bottom-up analyst consensus has cut earnings estimates only modestly so far. In summary; “(1) Mega cap growth and Tech consensus earnings are vulnerable from a pandemic hangover and a turn in the cycle, with earnings seen growing at trend rates from levels which are already 20% above (2) also vulnerable are other cyclical sectors as their earnings are seen accelerating from levels which are also already significantly above trend (3) Energy earnings are in line with elevated oil and refined product prices (4) Financials earnings are not factoring in any slowing in growth or recession risk (5) defensives earnings are seen returning down to trend (6) pandemic-hit company consensus earnings are seen rising rapidly as travel returns but from below prior trend levels” (Deutsche Bank Equity strategy) |
| They printed earnings |
| Drink a lot of tequila and you will have fun. Stop drinking the tequila, and you will not have fun…Print real-economy money at a fast pace (blue line up), and 12 months later earnings will grow strong (orange). Slow down the credit creation press, and earnings will quickly decelerate… |
 Macro Compass |
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