For the last few quarters, the market has shrugged off weak
revenue and earnings growth in anticipation of big growth in the
second half of 2013. But the odds of this growth materializing
Standard & Poor's
, earnings on the S&P 500 are expected to grow +3.8% this
quarter compared to the same quarter in 2012. But Q4 earnings are
expected to surge +27.2%.
But in looking at the two charts below, it seems to me that
this big expected jump in earnings growth in the second half is
I find it hard to believe that corporate earnings are going to
soar with profit margins already at record highs and revenue
barely growing amid a struggling world economy.
Of course, earnings watchers like myself have been pounding
our fists on the table about this for months now, but the market
continues to creep higher nonetheless.
But now that second quarter earnings season is getting
underway, perhaps investors will begin paying attention to the
second half of 2013. And maybe this earnings season will finally
provide the "wake up" call that causes the market to dramatically
lower its growth expectations.
, the ratio of negative pre-earnings announcements to positive
ones so far this earnings season (more than 6:1 as of Monday) is
the highest since the first quarter of 2001.
So do you think this will be the earnings season that the
market finally starts to realize that the odds of exceptional
second half earnings growth are slim to none? Perhaps more
importantly, do you think the market will even care?
Chime in below.
SPDR-DJ IND AVG (DIA): ETF Research Reports
NASDAQ-100 SHRS (QQQ): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
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