If estimates are anything to go by, S&P 500 earnings troughed in the first half of the year and will recover in the second half. However, experts say any growth in the second half likely won’t be meaningful. And then there’s the fact that the S&P 500 has posted a massive rally over the last five years despite the lack of any earnings growth at all.

Have investors lost their heads?

S&P 500 skyrockets despite the lack of earnings growth

In his June 8 Breakfast with Dave note, Gluskin Sheff Chief Economist David Rosenberg called the current U.S. equity market “the most overbought market since July 2014” as almost 70% of S&P 500 stocks are trading higher than their 200-day moving average. Further, this is occurring even though the general economic growth outlook “is still pretty bleak.”

“There is seemingly no visibility on the part of the folks who run the corporate sector, and the anomaly is that there are investors out there who are snapping up shares who apparently do have the visibility,” Rosenberg wrote. “I have no clue what they are seeing, unless it is all about central banks and ‘TINA’ (There Is No Alternative).”

The well-known economist noted that since the stock market peaked more than one year ago, earnings have declined 8%. Further, the S&P 500’s operating earnings per share is where it was in the second quarter of 2011, but the index has skyrocketed 50%. Additionally, he said earnings are at the same level they were at in the second quarter of 2007, but the index has rallied 50%. Further, he pointed out that reported earnings are where they were in the third quarter of 2006, but today the S&P 500 is above 2,100, while then the index was at around 1,250.

Will there be any earnings growth for the S&P 500 soon?

Rosenberg’s observations put the current lack of earnings growth into perspective, and S&P Global Market Intelligence Senior Analyst Lindsey Bell suggests that real earnings growth may not become a reality for some time. She said in a June 7 report that consensus estimates for S&P 500 earnings this year are finally starting to improve, but there is reason for skepticism.

She said that over the last month, Wall Street estimates for aggregate S&P 500 earnings have increased by almost 50 basis points, which boosts expected growth to 0.4% from the expectation for negative growth at the beginning of May. However, Bell says the reason for this improvement in estimates is unclear “and may even just be typical behavior for the index.”

“Typical” for the S&P 500?

She pointed out that data has been mixed over the last month, with housing data being a bright area while consumer spending and sentiment holding steady. Oil prices have been climbing, however, while the U.S. dollar’s decline has released some of the pressure on U.S.-based multinationals.

On the other hand, consumer confidence is no longer improving, and the last two jobs reports disappointed. S&P 500 earnings for the first quarter ended up beating estimates, but profitability declined 5.4%, marking the third consecutive decline, and the nearly 260 basis point beat was far lower than the historical average beat of 400 to 450 basis points. Guidance wasn’t particularly great either.

So why are earnings estimates rising? Bell reports that based on earnings trends going back to 2012, full-year estimates usually bottom out at or around early May, then rise for a few weeks before returning to a downward trend going into the third quarter earnings season in the middle of July. She adds that this pattern suggests that the recent improvement in S&P 500 earnings estimates for the full year could only be temporary.

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“While we still believe the second half of 2016 will provide positive earnings growth results, it may not be enough to significantly improve the overall market outlook for full-year 2016 prospective earnings,” Bell warned. “During periods of extreme economic stress, as experienced in 2008 and 2009, earnings estimates can move erratically. Even in the period following the years of the Great Recession, earnings growth has been difficult to predict given the subpar economic growth experienced. This has led to reductions in earnings over each quarter except one since 2012.”.

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