Fourth quarter 2018 earnings season has wrapped up and the news isn't so hot for corporate America. Aggregate year-over-year S&P 500 EPS growth came in at just +12.3%, that’s nearly half the #PeakCycle growth rate of +24.5%.
Meanwhile, with global growth decelerating to multi-year lows, dollar strength, and accelerating unit labor cost growth, we see even a modest erosion in EBIT margins potentially causing a multi-quarter earnings recession.
The CapEx boom that was supposed to unlock American productivity was short-lived at best. Now we're on the back side of tax reform and all its associated "animal spirits." What can U.S. corporations do to comp those comps?
While Wall Street expectations have come down markedly, our earnings recession outlook coupled with our dour domestic and global economic growth outlook certainly isn't priced in.