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This Is What To Expect From The Q3 Earnings Cycle

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The analysts are expecting good things from the S&P 500 (NYSEARCA: SPY) during the Q3 earnings season, as are we, but that's not what investors should be worried about. While earnings growth is expected to be robust once again, the dark cloud of inflation and supply chain issues is cutting into the outlook. The risk for investors is not so much that earnings growth will fall short of the consensus estimate but that growth will fail to inspire and the outlook for Q4 earnings will deteriorate. In a market where great results are already baked into the cake, less than expected results and a deteriorating outlook for future earnings is a recipe for a market correction.

One of the more noteworthy trends of the post-pandemic environment is that the analysts have been cautious in their estimates and have consistently been upgrading their outlook on a quarter-to-quarter basis as each earnings cycle unfolded That same trend was evident in the Q3 consensus for earnings growth up until a few weeks ago. The consensus estimate for Q3 earnings growth among S&P........

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