Are you an institutional investor who enjoyed this macro analysis? The pattern below has worked so far, but I don't think it will be proven right heading into 2024. The excess money printing from the pandemic being fully worked through by next year Fiscal headwinds in 2024 replacing massive US deficits which helped growth remain resilient in 2023 Accelerating refinancing cliffs (especially in Europe) I personally think earnings growth will instead disappoint next year - analysts are expecting a rosey 12% EPS growth while we face: That's the last missing point to validate this pattern which would point to new highs ahead for the S&P 500. The main question now is: will earnings start moving higher too? In other words one doesn't need to wait for all the economic doom and gloom to show up before buying stocks - the optimal time to buy seems to be about 9-10 months before.Įarnings have kept falling in the meantime, so this historical pattern seems to have been respected so far. Historically, bear markets tend to exhaust (blue line starts trending up) way earlier than earnings per share find a trough. It shows the earnings-per-share (EPS) growth in white and the S&P500 equity market price in blue: what's the deal? This chart tells us something about the path ahead for equity markets.