MW: If GDP estimates are falling, why aren’t earnings forecasts?
Even as U.S. GDP estimates are being cut back, forecasts for second-quarter earnings have been on the rise, notes Brewin Dolphin’s Mike Lenhoff.
That could make for an interesting July:
“Either a rude awakening lies in store when the second quarter earnings results start coming through next month – and disappoint – or the rest of us are in for a big surprise when equity markets led by Wall Street reverse course and head back up on positive news flow,” Lenhoff wrote in a note to clients Monday.
Lenhoff notes that in other parts of the world, notably France and Germany, GDP estimates are going up.
“Equity markets may remain under pressure for the next short while but their downside is likely to be limited and, with earnings expectations holding surprisingly well, it won’t take much to get them to rebound,” Lenhoff concludes.
