Chart of the Day: Earnings Growth
This chart from the Wall Street Journal explains visually what worries me about the supercharged run up in the S&P500. While the index is increasing, earnings growth is not.
When the margin compression I am predicting occurs, earnings growth will turn negative. Over what time frame will all of this occur? That’s question number one. How can government stop this from tanking the US economy? That’s question number two. We are in an election year and so the Obama Administration will do its best to keep up as much economic stimulus as they can. I still don’t believe It will be enough but let’s see.
Source: Earnings Season: Don’t Get Your Hopes Up – WSJ