Tuesday, 10 October 2017 10:45

Get Ready for Bad Earnings

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(New York)

Stocks may have been doing very well lately, but that does not mean the underlying businesses have necessarily been doing well. The third quarter ended a little over a week ago, which means a new earnings season will begin shortly. Earnings have a lot of pressure to deliver given currently high valuations and recent gains, but are expected to have slowed considerably, with gains of 2.8% predicted. That weighs against double digit growth in the first two quarters of the year.

FINSUM: Ironically, the bad earnings expectations seem to be helping stocks, as the low bar means many believe stocks will outperform, leading investors to see gains as likely. This is a classic case of how equity analysts manipulate the market.

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