In line with many leading indicators that the US is headed for a recession, US equities earnings are behaving in a manner reminiscent of the lead-up to prior recessions.
The main US banks will report results the following week as the earnings season picks up speed.
Recent months have seen a substantial slowdown in earnings growth as the economy adjusts to rising rates.
Global exports, earnings surprises, and the ISM all provide trustworthy leading relationships for S&P profits growth and all indicate deterioration in the months ahead.
Earnings will slow down more quickly if there is a recession.
Equity returns are already being negatively impacted by profit margins and P/E ratios.