Wall Street braces for earnings contraction and recession

Wall Street analysts predict shrinking returns from S & P 500 companies for the second quarter, setting the stage for recession in US revenue.

Forecasts indicate a fall of 0.4% in EPS for the three months to June, compared with the same period last year, according to FactSet.

In the second quarter, four sectors are expected to record reduced technology and technology revenues by 9.3% and 4.3%, respectively.

Corporate results are under pressure from the deterioration in the economic environment. The International Monetary Fund cut its forecast for the growth of the global economy for 2019 and 2020.

This situation is not helped by US-China trade tensions as well as the strength of the US currency. This year's corporate earnings are also facing the tough task of coping with strong growth from the past, backed by Trump's tax benefits.

"In the US and around the world, the business cycle is entering its final stages," said Michael Underhill, chief investment officer at Capital Innovations. "This is an activity of the late stages, characterized by moderate growth, tightening of credit and revenue delays." The next phase is shrinking or recession. "

Underhill expects a fall in US markets, followed by an adjustment that will recover only a fraction of the losses.

Fears of recession covered the stock at the end of 2018, which led to a dramatic sale. For the time being, assets are doing well, but remain below last year's highs.

Source: Financial Times

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