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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (78124)	4/22/2008 2:01:17 PM
From: RealMuLan	Read Replies (3) \| Respond to of 116555

Wall St. optimism called off the mark Economist sees brief, but harsh, downturn canada.com JOHN MORRISSY, Canwest News Service Published: 9 hours ago Unbridled analyst optimism for Wall St. earnings will prove misguided, producing volatile markets as players encounter recession-adjusted returns, according to National Bank chief economist Clement Gignac.The consensus estimate compiled by Thomson Financial calls for S&P 500 earnings growth to decline 12.4 per cent in the first quarter. But for 2008 as a whole, the consensus sees earnings growth of 12.2 per cent, implying the U.S. downturn will be harsh but brief, Gignac said. "In leaving their yearend outlook essentially untouched over the last three months, (analysts) have been ignoring a barrage of recession indicators," he said. "We think the ongoing economic downturn and high commodity prices have rendered unattainable the consensus expectation," Gignac said. "Our own forecast is for a seven-per-cent decline in S&P 500 earnings." Gignac says analysts may be wrong in assuming the current downturn is merely a blip, and cites historical data showing earnings optimism in economic downturns tends to be off the mark. In 1990-91, analyst estimates were 30 per cent higher than actual earnings, Gignac points out. In 2001, the gap topped out at 32 per cent, and in none of the last four recessions did earnings rise in the year of the contraction. "If our projection is on the mark, history will repeat itself with Wall St. analysts forced to revise down their 2008 earnings projections in order to factor in the full impact of the U.S. recession," Gignac said.