After a pretty ugly start, earnings season has improved significantly.
"Of the 251 companies that have reported earnings to date for Q4 2013, 74% have reported earnings above the mean estimate and 67% have reported sales above the mean estimate," said FactSet's John Butters on Friday. "The percentage of companies reporting EPS above the mean EPS estimate is above the 1-year (71%) average and the 4-year (73%) average."
Analysts now expect Q4 earnings to reflect 7.9% growth, which is up sharply from 6.3% a week ago.
This seemingly encouraging news is also hilariously ironic.
You see, for months, stock prices had been rallying even as earnings estimates were being slashed. And for many, this is a big head-scratcher as earnings are the "mother's milk" for stocks. (We've written about it here, here, here, here, here, and here.)
In recent weeks, we've finally seen stocks sell-off. But ironically, the top of the market coincided with the bottom in Q4 earnings growth expectations.
All of this reminds us that the stock market can appear quite irrational in the short-run.
