We are still in the longest bull market on record, yet the entire trading community seems convinced the bull market is about to roll over.
If analyst estimates are trustworthy, we are on the verge of an earnings recession, that is, two consecutive quarters where earnings growth goes negative compared from the previous year.
First-quarter earnings are expected to decline by 0.7 percent, according to Refinitiv, and second-quarter earnings are expected to be up a measly 3.4 percent and seem vulnerable to further downward revisions.
As earnings recessions go, this one so far is pretty modest: It looks more like flat earnings growth after a torrential two-year run.
Regardless, last year's 6.2 percent decline in the S&P 500 is being hailed as proof that the market has sniffed out an imminent drop in earnings. This news is being greeted with the usual round of hand-wringing from analysts and strategists, many of whom are predicting little if any upward movement in stocks this year. Especially after a 10 percent snap back in the market so far this year.
But does a modest decline in markets invariably mean earnings are going to plummet? It does not.
Let's be clear, it's not good news. The last time this happened, in 2015 and 2016, the S&P was indeed down for 2015, though by only a modest 0.7 percent.
After earnings growth north of 20 percent in 2018, what's behind the slowdown?