BullBear Trading: Stock and Financial Market Technical Analysis

Deficit to GDP Ratio and Q4 2012 Earnings

Will the Deficit as a percentage of GDP get down to World War II levels by the end of the Obama Administration?

Source: Bianco Research

It's interesting that there has been virtually no attention paid to the forthcoming 4th quarter earnings reports.  Apparently the most fundamental of fundamentals supposedly underlying the movement of stock prices is not a concern.  

Source: Adam Parker, Morgan Stanley

Just four companies—Apple, AIG, Goldman Sachs, and Bank of America—together provided a majority of overall earnings growth among large-cap companies.

Here are some interesting datapoints which do not bode well for Q4 2012 earnings:

Earnings Growth: The estimated earnings growth rate for Q4 2012 is 3.0%. The Financials sector is

expecting the highest earnings growth for the quarter, while the Industrials and Information

Technology sectors are projected to see the lowest earnings growth.

+ Earnings Revisions: On September 30, the estimated earnings growth for Q4 2012 was 9.3%. The

Materials, Information Technology, and Financials sectors have recorded the largest reductions in

expected earnings growth during this time.

+ Earnings Guidance: For Q4 2012, 79 companies have issued negative EPS guidance and 30 companies

have issued positive EPS guidance.

(Source: FactSet Earnings Insight)

There has been a growing negative trend in EPS guidance:

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