Well, hope springs eternal in the stock market but Q4 earnings are set to fall and companies that have already reported have seen QoQ declines in earnings. This is key as stocks typically trade at a multiple of earnings.

And since interest rates are likely to continue to rise, at least until 2H 2023, if we don’t see multiple expansion, stocks are likely to be whacked.

The market is already overpriced based on Q3 earnings; P/E on the S&P 500 is tracking at 20, mean is about 16. Not clear why stocks would catch a bid as earnings fall.

And over the past few days prevailing dialog in the markets has shifted away from rate hikes to the possibility of a recession; we’re likely to see the mood of participants change as well.

Still, here’s hoping! I buy only dividend payers, so don’t really care too much about current period share prices.

https://medium.com/@dacoker/the-q4-earnings-outlook-is-grim-8aa90e1a025d

Retired Investment Banker, Deutsche Bank, ABN AMRO, Moodys, now University Lecturer in London. Financially independent student of markets. American / British.

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Dave Coker

Retired Investment Banker, Deutsche Bank, ABN AMRO, Moodys, now University Lecturer in London. Financially independent student of markets. American / British.