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Yahoo Finance Gets it Right on S&P 500 Earnings

Last week, in an article titled “One Way or Another, We’re Going to End Up in the Same Place“, we wrote that we expected the Federal Reserve rate hikes to work and in the process, cause a further slowdown in economic growth.  Deep Knowledge Investing has said and written since February that the US economy is currently in stagflation, and we expect the actions of the Fed to cause other market participants to become aware that GDP growth has turned negative.  In our article, we noted that despite slowing growth and higher fuel costs (which are an expense for most of the S&P 500), earnings estimates hadn’t declined (and had actually risen slightly).  Our view is that S&P 500 earnings estimates will need to come down which would likely lead to lower stock prices.

Today, Yahoo Finance made almost exactly the same point writing:

With quarterly corporate earnings season set the pick up in the next few weeks, the focus will soon shift to how companies have been navigating persistent inflation alongside early indications of softening demand. As of Friday, consensus Wall Street strategists were still predicting S&P 500 earnings would grow, in aggregate, by 10.4%, according to FactSet. Some have indicated this estimate will need to be revised down to fully reflect inflation’s impact to margins, and the effects of an otherwise softening economy.

We’ve written a number of articles recently criticizing large Wall Street firms like JP Morgan Chase, Goldman Sachs, and Deutsche Bank for being hopelessly behind on recognizing the economic turmoil affecting millions of Americans as well as the accounts of their clients.  Let’s give a round of applause to Yahoo Finance today for being on top of this coming development.


Information contained in this report is believed by Deep Knowledge Investing (“DKI”) to be accurate and/or derived from sources which it believes to be reliable; however, such information is presented without warranty of any kind, whether express or implied and DKI makes no representation as to the completeness, timeliness or accuracy of the information contained therein or with regard to the results to be obtained from its use.  The provision of the information contained in the Services shall not be deemed to obligate DKI to provide updated or similar information in the future except to the extent it may be required to do so. 

The information we provide is publicly available; our reports are neither an offer nor a solicitation to buy or sell securities. All expressions of opinion are precisely that and are subject to change. DKI , affiliates of DKI or its principal or others associated with DKI may have, take or sell positions in securities of companies about which we write. 

Our opinions are not advice that investment in a company’s securities is suitable for any particular investor. Each investor should consult with and rely on his or its own investigation, due diligence and the recommendations of investment professionals whom the investor has engaged for that purpose. 

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