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Earnings recession

Feb 08, 2023

Earnings growth of US companies is turning negative. This is actually a rare event : the last time it happened was during Covid-19 and it only occurred 5 times over the last 2 decades. According to star strategist Mike Wilson from Morgan Stanley the upcoming path of earnings is clearly negative. What this implies for the stock market becomes clear from today’s chart. These are indeed not the kind of leading indicators for the stock market we prefer. In such an environment, we believe it is important not to give in to the current market euphoria by fear of missing out ( FOMO ). The CNN fear and greed index is indeed firmly back into greed territory. We remain selective instead and focus on companies with undervalued earning power.

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