One of my favorite sources of market data is the spreadsheet on the Standard & Poor's website maintained by Senior Index Analyst Howard Silverblatt. The chart blow illustrates the growth in earnings optimism for "As Reported" earnings estimates over the past six months. The bottom line shows the estimates in the March 10th spreadsheet. The higher estimates come from the recent September 15th spreadsheet.
The 4Q 2011 estimate has increased by 17.6% over the past six months. Meanwhile the Consumer Metrics Institute continues to show a sustained drop in discretionary consumption, updated here. Since the consumer accounts for around 70% of the economy, do we have a disconnect between earnings optimism and actual consumption?
Of course, there's more to the market than the U.S. consumer. But a niggling doubt reamins: Is the growth in earnings optimism realistic — or a setup for disappointment?
Notes from dshort:
Accessing Howard Silverblatt's spreadsheet takes a bit of determination. Here's how to do it. Access to the spreadsheet requires a login, but it's free. Click on this page: http://www.standardandpoors.com/home/en/us. Then click on the S&P 500 link under Categories in the second column. You're taken to a page with a Download Index Data label below the opening paragraph. Click on the little plus symbol to the left of the label. The spreadsheet is stored at the "Index Earnings" link.
As-Reported Earnings are earnings including all charges except for discontinued operations and extraordinary items, as defined by Generally Accepted Accounting Principles (GAAP).
