Stocks will stay in an earnings rut as recession comes this quarter: Rosenberg

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Stocks are in an earnings recession and a downturn could sneak up on the economy this quarter, economist David Rosenberg says

Despite a seemingly strong first-quarter performance, stocks are still battling corporate earnings pressures, and a recession could easily sneak up on the economy in the coming months, top economist David Rosenberg warned.

"We are in an earnings recession, full-stop, and it's not over yet," Rosenberg said in an interview withon Thursday, pointing to positive investor sentiment after corporations posted strong financials over the first quarter. But that's largely due to earnings expectations being downgraded over the previous year, Rosenberg said, which has created a false sense of strength in the market. In reality, corporate earnings have been struggling and will continue to face pressure, he warned.

"Estimates, it's the game that Wall Street has been playing I think since I started the business. Lower the estimates, so that you can jump over the low bar, and all of a sudden, voila, even in the context of an outright earnings contraction, what do you know, almost 80% of companies are beating their estimates," he said."I just don't know why more people don't roll their eyes at the beats.

Stocks have faced pressure over the past year as rising inflation and aggressive Fed rate hikes weighed heavily on the market. Central bankers just issued their

 

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