Only 38% of S&P 500 companies that have reported have beaten revenue expectations - compared to a historical average of around 46%. As Bloomberg notes, Q3 2013 will be the first time for 3 consecutive quarters of sub-50% meeting expectations since their records began. Earnings are not much better having seen a slide in performance relative to expectations for 4 quarters now. It seems the hockey-stick of H2 2013 earnings hope that we so vociferously pointed out [3] as ridiculous early in the year is indeed far too high and combined with valuations (as we noted here [4]) that are stretched (Price-to-Sales at 1.6x is around twice the norma since the 1990s) it suggests that any hint of a taper will remove the only leg left for stocks - that of hope-based multiple expansion.
[5]
Source: Bloomberg