Recession (zt)

Here's a word you are going to hear a lot: recession. The definition of a recession is negative growth that lasts for two quarters. Negative growth in one quarter here and there is fine. Two quarters, or half of the year, shows sustained weakness in the data and may be the start of a trend.

Earnings for the S&P 500 Index declined 0.3% in the first quarter of the year. Second-quarter earnings are showing an expected decline of 2.6%, according to FactSet. If this plays out, we'll be in the middle of an earnings recession. To be clear, this is not an economic recession. An economic recession is a very bad sign for the economy. It shows a significant decline in economic activity and has a negative impact on the stock market as well.

We are in a recession right now, but it's not an economic recession. An earnings recession without an economic recession is rare. It's occurred four times in the past: 1974 to 1986, 1998, 2012 and 2016. As you can see in the chart below:

The blue line is the S&P 500 price movement. The orange line represents the earnings for companies in the S&P 500. It notes the earnings recession. And the gray-shaded area represents an economic recession. We're in the middle of another earnings recession. As the economy continues to show strength, this year could be the fifth time this dynamic occurs. Whenever we've seen this recession dynamic play out, it's shown to be bullish for the stock market — even years after the earnings recession passed.

This bull market will come to an end. They all do. But it's not going to be because of the current earnings recession. 

 

所有跟帖： 

• 哈，给牛壮胆了！ -八落- ♂ (0 bytes) () 07/20/2019 postreply 06:03:26

• 谢谢分享 -兴梓- ♂ (0 bytes) () 07/20/2019 postreply 07:12:42