Friday, February 5, 2016

The Worst Earnings Season in 6 Years

Depending on who you listen to, this is either the worst earnings season in 6 years ... or worse than that.

Thompson Reuters reports that earnings are in for 63% of S&P 500 companies as of Friday morning, Q4 earnings are on track to decline 4.1%. That is worse than the 3.7% retreat forecast at the beginning of the years. This is the biggest drop in six years and follows a 0.8% dip in Q3.

There's a word for this: Earnings recession.

Another, more detailed version here.

Energy earnings are on track to crash 75.3%. Earnings in the materials sector are on track to drop 18%.

What's the problem? Carnage in the oil patch and a too-strong dollar. When the dollar is too strong, it hurts U.S. companies trying to sell goods overseas.

According to Thompson Reuters, Q1 earnings are expected to decline 3.6% to 3.9%. Q2 earnings are expected to fall 0.2%. 

Okay, that's the bad news. Now for the worse news. 

See, Thompson Reuters isn't the only game in town. S&P Global Market Intelligence also does its figures. And it says Q4 earnings are down 5.09% from the fourth quarter of 2014.

We are in an earnings recession. Invest accordingly. 

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