Earnings Expectations and Bull Markets

We recently wrote an article for Asset magazine analysing great bull markets since WW2 and looking for reasons why they end.  Our current bull market is running at about the same pace as the others, is longer than average, but not as long as the longest.  It is really hard to identify factors that consistently coincide with the end of a bull market - we looked at rate hikes, inflation, unemployment, long rates, GDP etc and found that nothing was consistent.  Sometimes there were rate hikes, sometimes there weren't.  Sometimes unemployment was high, sometimes low.  Sometimes unemployment was rising, sometimes it was falling.  

The one factor we have found to be quite consistent was negative corporate earnings growth.  That makes us a little bit sanguine about the current equity market volatility - earnings expectations are still pretty good.   The table below shows expected earnings for the FTSE indexes (published by FTSE on 31 July 2015).  Global earnings growth of 12% in 2016?  That's  not too bad.......  If companies deliver on earnings expectations, we do not see the current volatility as the start of a bear market for equities.

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