The Fed Will Soon Face Its First True Volcker Test: Continuing To Hike Into A Full-Blown Recession
US equity earnings are behaving similarly to the run-up to previous recessions, tallying with multiple leading indicators showing the US is on track for an economic slump. Earnings season gathers paces next week, with the big US banks announcing results. Earnings growth has slowed sharply in recent months as the economy feels the impact of higher rates. The ISM, global exports and earnings surprises all give reliable leading relationships for S&P earnings growth, and all point to weakness in coming months. If we do get a recession, then the deceleration in earnings will intensify. Profit margins and P/E multiples are
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