U.S. stocks markets' poor performance since November is due to an already present "profits cliff," not a future "fiscal cliff," Societe Generale strategist Albert Edwards said in a note on Wednesday.
"The bottom line is, despite the upside economic surprises, profits have been spiraling downwards. It is not the impending fiscal cliff the market is worrying about, it is the actual profits cliff we have already fallen off," wrote Edwards, who is known for his bearish views.
Edwards said that while the 2012 U.S. profit outlook had risen based on third-quarter results, the earnings outlook for 2013 had slumped.
According to Societe Generale data, the proportion of companies upgrading their 2013 earnings outlook has fallen over the past month from 48 percent to 42 percent, despite a gain in the proportion of companies upgrading their 2012 outlook.
Edwards said the decline in 2013 outlook signifies the U.S. is already in a "profit recession."
"The recent decline in the equity market is more reflective of the dreadful profits backdrop than the upbeat economic data," he said. "The last time we saw this divergence between the market and the data — mid-2008 — the economy had already slipped into recession some six months earlier. That is where I believe the market is now."
Edwards' views concur with those of his colleague Andrew Lapthorne, head of quantitative equity research at Societe Generale.
"For earnings momentum to collapse during a reporting season is highly unusual, as optimistic forecasts are generally reeled in over the period between reporting sessions. … With global earnings momentum down in the low 40s, it suggests we are already in a profit recession," wrote Lapthorne in a report on Monday.
—By CNBC.com's Katy Barnato