Recession vs. Moderation — Equity markets are pricing in a profits recession for 2012. While risks of a serious downturn are rising they still remain low. We expect a moderation in GDP and EPS growth, not a contraction.
Around Market Lows — However, stock prices are unlikely to move convincingly higher until we see further signs of stability. History suggests a number of indicators should stabilise to confirm a bottom in markets. Importantly, we need to see a slowing in the pace of EPS downgrades by analysts.
Global EPS Revisions Index (ERI) — Global EPS revisions have had their weakest 5 weeks since 2009. It is still too early to say the pace of downgrades is slowing but there are some fledgling signs that we could be approaching the lows.
Around Market Lows — However, stock prices are unlikely to move convincingly higher until we see further signs of stability. History suggests a number of indicators should stabilise to confirm a bottom in markets. Importantly, we need to see a slowing in the pace of EPS downgrades by analysts.
Global EPS Revisions Index (ERI) — Global EPS revisions have had their weakest 5 weeks since 2009. It is still too early to say the pace of downgrades is slowing but there are some fledgling signs that we could be approaching the lows.
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