Warning: Earnings Are Expected To Rebound

The consensus estimate is that earnings will rebound in the coming quarters into and through 2025. This is a warning to investors as expectations are priced into the market 6-12 months in advance. This means that if these robust earnings do not come through, there is a major market correction on the horizon.

Another concerning factor is that consensus is rarely correct. For example, at the start of this year, consensus estimates were for 6 Federal Reserve rate cuts. We are now down to 1-2.

Consensus was for inflation to move below 3%, heading to 2%. It got close to 3% and is now starting to move higher. Again, consensus wrong.

Lastly, these estimates are based on the consensus among analysts that there is no recession and its a soft landing or not landing for the economy. This should be another concern. If the U.S. economy slows down, these estimates are WAY too high.