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Goldman Warns S&P EPS Growth May Flatline In 2020 On COVID-19 Hit
Gradually - and probably begrudgingly - analysts are beginning to temper their outlook for US equities and otherwise adopt an overtly cautious tone in the face of the burgeoning pandemic.
As tempting as it is to suggest Wall Street has been behind the curve when it comes to COVID-19, I would say that's not really the case. I can cite at least a half-dozen pieces of research that contain worst-case scenarios right out of a Hollywood doomsday action flick and base cases positing a deceleration in
The pool of potential negative catalysts for equities here is longer than the Colonial pipeline and about as translucent. Some analyst wrote yesterday about their fear of a sea-change in consumer psychology. Who had “sudden global consumer frugality” in their GDP forecasts last month? As earnings impact unfolds, when do companies decide they need to pause their buybacks and conserve cash till the dust settles? EPS growth flatline may be tomorrow’s bull case and next week’s impossible dream.
Flat growth in earnings this year at this point looks optimistic. So does 1.2% GDP growth for the first quarter. Boeing was set to drag down growth prior to any of this and the economy was struggling to grow at 2% before Boeing. The really interesting numbers are q2 and q3 when the full impact of this hit. Remember also China probably is not buying all those soybeans and LNG from the US after all. And a more proactive Fed (Greenspan, Bernanke or Yellen) probably would have already cut rates at least 25 bps by now. Our current FOMC is more reactive and is in danger of falling far behind the curve (no pun intended).