Deutsche Warns Companies Will Sharply Cut 2017 Earnings Expectations Next

Tyler Durden's picture

Yesterday, Deutsche Bank's equity strategist David Bianco joined Goldman's David Kostin in warning that Friday's selloff was just the beginning, predicting that an "8-10% decline in the S&P looms" as a result of "manic" levels of PE relative to VIX, and various other indicators confirming just how stretched the market has become, coupled with unprecedented complacency and a record low VIX. 


But it's not just the market that DB is worried about: in a separate report, Bianco also warned that "3Q S&P EPS results will not impress" and that companies will be forced to lower 2017 expectations.

This is why Bianco thinks the E in PE is about to slide even more:

"Our profit indicator suggests 3Q S&P EPS had little or no growth from 2Q. We expect 3Q S&P EPS to be near $30 or down 1% y/y.



Unless oil climbs strongly, quarterly S&P EPS is likely $30-31 through 1H17.

Bianco also points out some key macro indicators which in the recent month have seen a dramatic swoon as the US economy once again appears on the verge of a recession:


Bianco's conclusion: "We expect 3Q reporting to lower btm-up 2017 EPS most at Financials, Staples, Con Disc and Industrials. The general expectation for 2017 S&P EPS will fall from $130 to $125-130."

This should not come as a surprise to regular readers: just on Friday we warned that "A Flood Of Profit Warnings Just Crushed The "Earnings Recovery"." In the days ahead expect the flood to become a full-blown deluge, now that the seal has been broken, and more companies feel liberated to tell the truth, especially with the Hanjin bankruptcy providing a convenient backdrop on which to blame the "unexpected" collapse in Q3, Q4 and so on EPS.

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silverer's picture

I'm really beginning to loathe corporations.  All they do is conspire with paid off politicians to screw everyone they can.  Tell me it's not true.  Then prove it.

I am Jobe's picture

I concur . Look at the Dell EMC deal , how many folks are going to be screwed 

in4mayshun's picture

Hey, I was pleasantly surprised this week to see that, in my town in Ca, people are finally telling homeowners selling their overpriced crap, to shove-it. I was speaking with a realtor (who generally speaking, I despise...) and she lamented that the market seemed to turn on a dime recently and it has quickly become a buyers market. Our car dealerships are selling less cars and the restaurants seem less full. I could be a little early, but I think maybe we've passed peak economic bullshit and were about to see the tide change.

bleu's picture

The world's just beginning to pay for the Greatest Injustice of the 20th Century that's still ongoing.

hp-source's picture
hp-source (not verified) silverer Sep 11, 2016 10:36 PM

My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do...

abyssinian's picture

People still care about earnings?  What century are they in?  It's all about more money printing and what kind of bullshit lies the Feds will come up with next week....


Douchebank better get with the program soon!

zagzigga's picture

They do care - in a way. Companies cut their earnings outlook drastically, then beat these forecasts by a tiny bit and their stock price shoots up because they "crushed" earnings! Never mind that yoy earnings have declined heavily.

AnngeloJamaica's picture

The Dark Ages, The Templars.  

saveUSsavers's picture



WE ALL THE FUCK KNOW IT'S $87.00 and falling, fuckface arsewhole



GUS100CORRINA's picture

saveUSsavers ... RIGHT ON ... GLAD YOU SAID SOMETHING!!!!!

Good work!!!!

gregga777's picture

Earnings and revenues are fake US Swindlers Excuse Commissars–approved non–GAAP fantasies. Give your money to Con Street and kiss it goodbye. The SEC exists solely to protect the swindlers who rip off the suckers, I mean, the American investors.

Dragon HAwk's picture

You can Lie about the Boat sinking...

 But sooner or later your feet get Wet.

buzzsaw99's picture

why do they bother?

smallbedbug's picture

Another deal is Microsoft buying Linkedin...waste of money or the Microsoft stock holders will get screwed at the end. Example of wastifulness - the 2 year rotation program at Linkedin is a big waste of company money. All about bonding - going on retreats and weekly dinner BS. Let's be a village. That group should be laid off first once the deal closes in December. 

CheapBastard's picture

The entire economy is spiraling down so fast. Just take a walk thru any mall or strip mall....disastrous demographically and financially.

Ban KKiller's picture

Fudge, fudge, fudge the numbers until they work, damn it! What do you NEED the numbers to say? Ok, got it!

Wulfkind's picture

Fudge, fudge, fudge.....

So...that's where the saying....."Pull it out of our asses".....comes from.


RadioFlyer's picture
RadioFlyer (not verified) Sep 11, 2016 7:29 PM

Djia futs were -436 all weekend, made it back to -33. Quite the trip!

ClownBaby's picture

Am I the only one that automatically thinks Douche Bank?

Yen Cross's picture


   I agree with 'Douche Banks' economic assessments.

 Being a failing bank that has massive risk and derivative exposure makes the ~ truth come out.

  Roll The Guillotines MOFO's

JailBanksters's picture

Oh No, are they cutting Corporate Welfare, no company is profitable without welfare

Father ¢hristmas's picture

Moar QE!  And don't even think about giving companies tax incentives to hire workers at decent wages to spur consumer demand, spur economic growth, and reduce gubmint spending!  

Just give them the munney, purchase their bonds, let those algos inflate equities with fiat digits, and clog up inventory and shipping routes even moar!

Then hire Bill Clinton to go on TV and tell the Merican worker, "You deserve that, you idiot!"

And when health care collapses, tax the living shit out of small bidnesses even moar for socialized medicine!

onwisconsinbadger's picture

All the bad news will come out before the fed meeting to scare them not to raise rates. Business as usual after that.

Yen Cross's picture

  The same Douche Bank that just unloaded $billions of worthless paper to CITI?

 I can smell the bailout/in, even befor it happens.

hedgiex's picture

Talking books from fundamental analysis (P/E, etc) to forecast market moves ? Markets move in front running CBs...Stupid. 

If markets respond to fundamentals, DB is a zombie. Silly investors might as well hold Germa Govt papers (in term of risk) than DB with dynamite (derivatiives) in its basement. The pretensions that it is global with all its footprints are jokes. Just feeding its cronies with more financial tricks that naive investors still suck. 

zippy_uk's picture
Deutsche CEO - "We'll say everybody else is unprofitable, then we can cut out profit forcasts to loss without anyone noticing before we go bankrupt our selves. By that time we will have sold all our stock like Jeremey Isaacs did at Lehman.."