Equity markets remain volatile amid sharp deteriorations in economic data and investors slowly digesting the impact of the virus on earnings reports. Comparing current analysts’ earnings revisions to the peak-to-trough revisions in the previous two recessions betrays a significant level of optimism in today’s valuations. Outside of Europe, in particular, earnings expectations appear especially conservative given the magnitude and uncertainty associated with the current pandemic and compared to a relatively benign recession like 2001. While market prices tend to bottom two to three months before earnings expectations, it is possible that these modest earnings revisions may not be consistent with a market trough yet.
Refresh this chart in your browser | Edit the chart in Datastream
This chart is taken from Fathom’s daily Recession Watch newsletter. Click here to subscribe to Fathom’s daily Recession Watch and receive invitations to Fathom’s regular Recession Watch Forums and participate in lively discussions with our team and others in the community.
Next forum date: Monday 4 May 2020, 3:00pm BST
__________________________________________________________________________________
Datastream
Financial time series database which allows you to identify and examine trends, generate and test ideas and develop view points on the market.
Refinitiv offers the world’s most comprehensive historical database for numerical macroeconomic and cross-asset financial data which started in the 1950s and has grown into an indispensable resource for financial professionals. Find out more.
