Advertisement
Canada markets close in 6 hours 16 minutes
  • S&P/TSX

    22,158.16
    +51.08 (+0.23%)
     
  • S&P 500

    5,250.90
    +2.41 (+0.05%)
     
  • DOW

    39,788.06
    +27.98 (+0.07%)
     
  • CAD/USD

    0.7373
    +0.0000 (+0.00%)
     
  • CRUDE OIL

    82.53
    +1.18 (+1.45%)
     
  • Bitcoin CAD

    96,205.38
    +673.42 (+0.70%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,228.20
    +15.50 (+0.70%)
     
  • RUSSELL 2000

    2,114.35
    +44.19 (+2.13%)
     
  • 10-Yr Bond

    4.2160
    +0.0200 (+0.48%)
     
  • NASDAQ

    16,390.50
    -9.03 (-0.06%)
     
  • VOLATILITY

    12.95
    +0.17 (+1.33%)
     
  • FTSE

    7,957.82
    +25.84 (+0.33%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • CAD/EUR

    0.6820
    +0.0015 (+0.22%)
     

DAVID ROSENBERG: There are 2 myths about a 'profits recession' I'd like to dispel

MythBusters Windshield 3
MythBusters Windshield 3

(YouTube/Corning Incorperated)
Earnings for S&P 500 companies are forecast to fall -2.8%, according to FactSet.

Ahead of peak reporting season, Bank of America Merril Lynch analysts noted that year-on-year profits were forecast to decline, causing what they called an "earnings recession."

In a note Tuesday, Gluskin Sheff's David Rosenberg clarifies two quick things about this so-called "earnings recession" or as Rosenberg calls it, a "profits recession."

  • First, the unprecedented nature of the oil crash meant that energy companies were bound to take a hit, and drag the consensus forecast for growth down.

ADVERTISEMENT

Rosenberg notes that excluding energy companies, earnings are set to grow 6.2% year-over-year in Q1, 5.2% in Q2, 6.7% in Q3, and 9% in Q4.

  • Second, the decline in profits is not a reason to be bearish about stocks.

Rosenberg adds that multiple expansion is being helped by the strong dollar, and highlights that in the mid-1980s and late-1990s, when the economy was not in recession, FX headwinds and low oil prices also shrunk earnings.

But that did not stop the S&P 500 from gaining more than 30%.

NOW WATCH: Adam Savage Of 'MythBusters' Says This Scientific Fact Blows His Mind



More From Business Insider