Déjà vu? LET'S HOPE NOT!BY CHRIS PUPLAVA
Back on August 27th I wrote a WrapUp entitled, "The Worst is Yet to Come." There are a few reasons why I made this statement, with an excerpt from the article provided below:
Falling Earnings & Profit Margins = Falling Markets
Mr. Rogoff is probably correct that we aren't even half way through the credit crisis, and I would also add that we are not even half way through the market correction, nor what will undoubtedly be declared a recession that began in either December of last year or January of this year. I agree 100% with the analysis of David Rosenberg, North American Economist for Merrill Lynch, presented in his article, "The Elusive Bottom." Mr. Rosenberg doesn't see the recession ending until mid-2009 and says that we could see S&P 500 operating earnings below $50, and also a price-to-earnings (P/E) multiple of 12…
Figure 1Source: BEA
So, with the credit crisis still in full swing and analyst estimates way behind the curve, the markets are likely to go through some serious disappointments ahead, disappointments that are not likely priced into the market currently. Thus, the markets will likely be much lower by year end and any positive strength should be used to increase defensive positions. The worst is likely to come…
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