Down Goes Q3!

The latest quarterly earnings results for more than 91% of companies in the S&P 500 Index have now been officially reported.  And the numbers are starting to look downright ugly.  For what was supposed to be a quarter that would mark a turning point in the prolonged annual earnings decline dating back to mid 2014 has turned out to be another corporate bloodletting.  The bulls may believe they are investing today for an improvement in earnings in the future, but unfortunately the data is telling an entirely different story with each passing week.

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Yeah, Because That Makes Sense

More than 85% of companies in the S&P 500 Index have now reported their latest quarterly results this earnings season. The results coming out of the past week provided us with the latest example of the fundamental contradiction that is the U.S. stock market in 2016. For while corporate earnings forecasts were once again revised meaningfully lower in the past week, stocks used the occasion to celebrate by surging to new all-time highs. Who doesn’t like to pay even more for earnings that are increasingly shrinking, right?

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It’s Even Worse Than I Expected

Roughly two-thirds of the companies in the S&P 500 Index have now reported their latest quarterly earnings. And while the headlines are filled with companies that continue to “beat” expectations, the reality is that the downward revisions in corporate earnings are even worse than what this stock market bear expected this quarter. And the readings for the latest week have almost assured that corporate earnings are going to fall short of the reasonable targets set at the beginning of the quarter.

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Where’s The Beef?

U.S. stocks continue to set new closing highs on a daily basis this summer. This is fantastic. But for these latest price gains to be sustainable, they have to actually be supported by the beef of rising corporate earnings. Otherwise, a valuation air pocket forms that eventually becomes unsustainable with stocks eventually falling back to reality no matter how low Treasury yields might be. The bulls frequently claim that stocks are rising today in anticipation of higher future earnings, and indeed analysts are forecasting a bang up 2017 in this regard. But where exactly is the beef behind these robust predictions of record corporate profits in the coming year?

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For What It’s Actually Worth

A new quarterly earnings season is about to get underway. But before the data starts to roll in and the chorus across the airwaves that “earnings are coming in better than expected” begins, it is worthwhile to determine exactly where we stand in terms of actual expectations for the upcoming quarterly earnings season.

Please click on the link to read more of my article on Seeking Alpha.