Earlier in the week, we did a quick story on a note from Credit Suisse's Andrew Garthwaite on various anomalies that were occurring in the market right now.
The big anomaly, as almost everyone knows, is the disconnect between Treasuries and equities. Equities have been on a tear. Treasuries are still pricing in fear and no growth.
The full note has some deep points regarding some strange turns happening in the market.
Particularly interesting is the disconnect between growth right now and earnings.
The macro data continues to be very strong, and yet we keep hearing about how Q4 earnings have been some of the worst since the end of the recession.
And there's a chart to prove the disconnect between leading indicators and earnings momentum.
One simple reasons for the earnings "weakness"? Consensus may have just gotten out of hand.
But it's not all bad news for stock investors.
This tells us that it is probably still right to be negative on earnings as we are (we forecast EPS to be 12% below consensus in Europe and 8% below consensus in the US). This is a problem but not necessary that bearish for markets. There have been plenty of years when earnings expectations fall a lot yet markets rise as we show below.
- The Big Winners And Losers In Markets Today
- Adjusted For Ongoing Phone Hacking Investigation Charges, News Corp's Earnings Beat Expectations
- Here Are The Key Market Moving Events For Thursday, February 9, 2012