Economic forecaster Lakshman Achuthan has a warning for investors: Brace for earnings to go negative.
According to the Economic Cycle Research Institute co-founder, the global slowdown is unleashing major challenges for U.S. corporations.
Achuthan turns to a chart of S&P 500 earnings growth to build his case.
"Every time you have a cyclical slowdown in growth, you have a big comedown in the growth of operating earnings," he told CNBC's "Trading Nation" on Wednesday. "We have in the current slowdown a big comedown — a kind of plummeting — of earnings growth following that boost from the fiscal push earlier in '18."
His call comes less than a week before second-quarter earnings season begins and on a day when the major indexes hit all-time highs.
"Even if quarter-over-quarter earnings growth is just flat, that year-over-year growth that I'm showing on the chart is going to go negative," said Achuthan.
S&P 500 companies are expected to modestly beat consensus estimates during the next round of earnings reports, according to Refinitiv. However, Achuthan contends it's too optimistic because the economic growth slowdown isn't abating.
"It's going to continue through year-end. There's no second-half rebound that everybody was waiting for," he said.
Plus, Achuthan warns stocks are vulnerable to a 10% or more pullback at these record levels.
"Correction risk is active right now during a growth rate cycle slowdown," he said.
Achuthan has been in the global downturn camp since late 2017. In early 2018, he warned Wall Street a "stealth" slowdown was creating U.S. challenges. His thesis is the struggles would have happened even without the U.S.-China trade war because it's a cyclical issue.
Despite his dour outlook, he doubts it spells the end of the bull market.
"We don't see a recession imminent," Achuthan said.