Equities Have Rallied Despite Consistent Earnings Estimate Downgrades

Global equity markets dipped 1.5% last week, but they are still up 18% for the year on the back of multiple re-ratings and early signs of an economic recovery in North America and Europe, but the steady stream of negative earnings estimate revisions is a sign that investors’ bullishness on equities may not be completely justified. “Factors limiting the further advance of the equity market include poor company fundamentals,” writes Citi analyst Andrew Lapthorne. “This is reflected in the high quantity of downgrades being posted by consensus. Downgrades to Q4 EPS estimates have outnumbered upgrades by a ratio of two…