CLSA Reminds Everyone: The Economy Was Struggling Long Before Brexit

As a result of Brexit, we pointed out that companies now will have a convenient scapegoat for any future earnings misses, or at the very least use Brexit as a reason to lower guidance for the remainder of the year without any pushback from analysts.

We also noted that with the referendum behind us, everyone would conveniently forget that earnings expectations had already been continuously revised down for quite some time now, long before Brexit.

But if you don't want to take our word for it, here is CLSA reminding everyone as well.

In a recent note, CLSA wrote that world trade growth had hit a new post-global financial crisis low long before Brexit ever came about.


World trade growth hits new low
The UK’s surprise Brexit vote has caused a spike in risk perceptions but even before the vote the global economy was struggling. With the March data world trade growth hit a new post-GFC low. Emerging Market demand has contracted on a YoY basis for six back-to-back months. And developed economy demand has weakened, from +3.7% YoY in the three months to November 2015 to 1.2% YoY in the three months to March

* * *

Of course this won't stop companies from using Brexit as a hall pass in order to explain away any and all misses and forward guidance revisions, and it also won't stop analysts from using the infamous "one-time adjustment" line in order to paper over the weaker earnings, but it is good to keep this in mind that the new narrative isn't the whole truth.