One thing about the current spate of weakening economic data points to be aware of is that it hasn’t yet translated into lowered earnings expectations from the sell-side. Since the bottoms-up approach (discounted cash flow analysis etc) is so prevalent in the way The Street rates stocks, it will be unsurprising to see them not react to this macro softening until way past the point where it actually helps anyone.
Same as it ever was.
Here’s the LA Times:
Among the 9,015 analyst recommendations on S&P 500 stocks, only 300 — or 3.3% — are to sell, according to data provider FactSet. That’s the same proportion as a month ago, when the economy was considered to be in better shape.
With large banks slashing GDP growth estimates (Goldie just went to 2% for Q2), estimate cuts are probably right behind. We’ll see if the stocks discount these before anyone on the sell-side starts chopping.