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Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye U.S. Macro analyst Christian Drake. Click here to subscribe. 

"... In the Chart of the Day below we show the spread between the # of companies beating by <3% and the # of companies missing by < -3% (black line) vs. S&P500 Operating Margin (pink line).

 

The simple takeaway is that with corporate profitability now past peak and margins contracting, the capacity for manufactured beats is lower and declining. With repo activity down some 75% in 3Q, that management lever is now apparently past peak as well."

CHART OF THE DAY: (Red Flag) Earnings Missing The Mark - CoD2 EPS Mgmt