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Much digital ink has been spilled over corporate earnings this year.
Something fishy is happening. The numbers are getting fudged. Companies are hiding things. It's all an illusion.
And so on.
So let's add this to the list: earnings are getting worse.
The following chart, which comes to us from the team over at Societe Generale, shows the momentum of earnings as measured by the 3-month rolling percentage revision of 12-month forward earnings forecasts. Basically, this is a smoothed view of how much or how little companies are cutting expectations.
"Looking at the sector level, the picture is not bright for the US market," SocGen wrote in a note to clients on Tuesday.
"Since Alcoa kicked off the earnings season on 11 January, the consensus has not only lowered commodity-linked sectors' 2016 [estimated earnings per share], but that of the entire market. Only the Insurance sector is expected to see EPS growth accelerate this year; all the sectors have seen their consensus EPS growth estimates slashed. In early January, the Oil & Gas sector was expected to see 2016 EPS contract only 4%, while three months later, consensus now forecasts a 50% [year-over-year] drop."
At this time last year things were getting better and corporate America's outlook basically peaked in the summer.
And it has been all downhill from there with the S&P 500, on balance, now expecting earnings to decline about 5% in the coming year.
Societe Generale