One persistent source of consternation for critics of what, until three weeks ago anyway, was an inexorable ascent for US equities, was the seemingly unrealistic assumption of a "hockey stick" inflection in earnings growth during the back-half of 2020.
One argument is that the market, being the forward-looking beast that it is, was looking ahead to 2019 when, during 2018, equities sold off hard despite record profit growth (courtesy of the tax cuts). By that logic, 2019's blockbuster equity gains amid decelerating (and eventually falling) earnings growth meant that the market was pricing in an inflection in 2020.
That argument was made by the likes of Ned Davis, for example. "Although over the long-term it is true that stock prices are positively correlated to earnings growth, over the the short-term, stock prices tend to be inversely correlated", a note from December reads.
Read more: Prophesying Profits.
By that rationale, the following chart isn't all that surprising, let alone alarming.
But, as the chart title (and subtitle) emphasize, the idea that corporate America is going to come out of the current (shallow) earnings recession and deliver on expectations for solid bo
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