With Q2 earnings season rapidly approaching its end, Bank of America points out a curious observation: stocks that beat earnings expectations are not getting “rewarded” with higher prices. This is the first time this has been observed in 17 years – the last time the market seemed oblivious to corporate upside was in 2Q 2000… just before the Tech Bubble burst. As BofA warns, “this could be a warning sign that equity market expectations and positioning more than reflect the good results.”
Adding to peak valuation concerns, BofA’s quant strategist Savita Subramanian also expects full-year EPS growth to decelerate from 8% in 2017 to 5% in 2018, and redundantly adds that “the stock market may not react well to decelerating earnings.” That’s one way of putting it.
Some more details on this notable “market peak” phenomenon:
This post was published at Zero Hedge on Aug 8, 2017.