Are we heading towards a soft landing recession?
Despite some earnings miss estimate and revenue dropped due to less demand and recession fear, the article drawn our attention that earning recession is different from economic recession. The writer quoted many evidences and signs that we may be heading for a soft landing like the recovery after recession caused by post WWII.
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It’s a legitimate concern given that earnings are the most important long-term driver of stock prices. But in the short-term, the relationship between earnings growth and stock prices is less clear. It certainly isn’t intuitive.
It’s a legitimate concern given that earnings are the most important long-term driver of stock prices. But in the short-term, the relationship between earnings growth and stock prices is less clear. It certainly isn’t intuitive.
It’s the latest reminder that the stock market usually goes up. Speaking of recessions, Belski also observed that earnings recessions don’t always come with economic recessions.
“Based on our analysis, four of the last seven profit recessions did not coincide or immediately precede economic recessions,“ he noted.
This is hopeful as economic recessions are generally bad for earnings and stocks in the short-run. While we’re on the subject, it’s also worth noting an economic recession doesn’t guarantee more pain for stocks.
“While there are clear differences between 1945 and today, one thing that both have in common is that unprecedented historical events caused dramatic shifts in the economy that required a tough transition back to more normal conditions,” Calvasina wrote. “Time will tell whether the stock market can look past any recession that occurs in 2023-2024 as the U.S. economy completes its transition into the post-COVID era.
Despite recent banking tumult, we continue to get evidence that we could see a bullish “Goldilocks” soft landing scenario where inflation cools to manageable levels without the economy having to sink into recession...All of this means the market beatings may continue for the time being, and the risk the economy sinks into a recession will be relatively elevated.
Source:
An earnings recession may prove to be better than feared
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I reflected trading experiences by writing journals. My comments are for educational purposes not financial advice.
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ragamuffin : Americans are a resilient bunch! Keep the faith in our Creator!
ZnWC OP ragamuffin : Indeed you are. History showed how US stock market recovered from major crises just to name a few: Great Depression, WWII and 2007-08 financial crisis.