Conclusion
We will continue to monitor the data for typical recession signals from employment, consumer spending, business sentiment, Fed policy, the yield curve, inflation and global economics. Unless stronger signs of impending GDP recession appear, a serious EPS recession is unlikely. Admittedly, the atmosphere is a bit foggy right now and there may be an EPS chasm ahead of us, so caution is warranted, but not outright bearishness. Unfortunately, a strongly Bullish stance is also unlikely, as the only way prices can rise during an EPS plateau is through higher P/E ratios and it’s very difficult to make the case for a forward P/E of 18x or greater.
Important Disclosure
IVW, IVE, VDC, VOX, VHT, VDE,VAW and VIS have been, may be and/or are currently held in several TOPS Portfolios.
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Source: Bloomberg for historic price and return references.
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