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Headline: This divergence can 'only end in tears’: Investor
The past several years has brought rather impressive earnings growth but little in the way of economic growth, which will eventually lead to a major problem for stocks, argues Gina Sanchez of Chantico Global.
Earnings and economic growth "should be related, and divergences are eventually brought back into line — so the excess money floating around since 2009 has created a divergence that will only end in tears," Sanchez said.
Her belief is that the stimulative policies of the Federal Reserve, combined with the machinations of corporations, have led reported earnings to become over-extended. This even as the S&P 500 looks set to log its second-consecutive quarter of negative year-over-year earnings growth in the third quarter.
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