WTI Collapses To A $40 Handle & What That Means For Earnings, In One Chart

Moments ago, following the DOE report of an unexpected jump in oil inventories which caught all algos by surprise, oil collapsed to a $40 handle...

 

...a price not seen since 2009.

 

So what does this mean for S&P 500 earnings in general, and energy earnings in particular?

Nothing short of much more pain, if not a complete wipeout, as the following chart - showing energy EPS with a 4 month lag vs oil prices - from Citigroup reveals.

Which, as we also reported two days ago, means forward energy multiples are about to explode to record highs and, as we also commented, if and when the realization arrives that forward multiples in the 25-30x range are just a "tad high" and multiples mean revert, watch out for a 50% crash in energy stock prices...

... which after a year of hopium courtesy of central banks, will finally metastasize to the rest of the S&P 500.