No End to Uncertainty

Please see below the latest ‘Chart of the Week’ from State Street Global Markets


This week Marija Veitmane, senior multi-asset strategist at State Street Global Markets, uses the wide dispersion of analysts’ earnings forecasts to suggest that it is too early to buy stocks.

“We believe that this recession will be short-lived, but it is still unclear how quickly and in what shape (V, U or L) the recovery will come. Historically, corporate earnings season was a good estimate for the state of the economy and to understand the future direction from companies’ CEOs. Whilst analysts are busy revising their earnings estimates for this year and next, we are unlikely to receive much clarity this time around, as there is very little agreement between analysts on exactly how bad the corporate backdrop is. The dispersion of analysts’ forecasts is just shy of an all-time high that was reached at the peak of the 2008 Global Financial Crisis. Optimism on the direction of the equity market will be difficult to maintain until we see more clarity on the corporate earnings outlook and until the dispersion of analysts’ forecasts subsides.”

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