Optimism up, earnings down

Bloomberg: “Financial market reconciliation lies ahead,” David Kostin, Goldman’s chief U.S. equity strategist, wrote in a note. The “S&P 500 Index will give back recent gains as investors embrace the reality that tax reform is likely to provide a smaller, later tailwind to corporate earnings than originally expected.”Kostin and his team pointed out that while corporate earnings estimates for 2017 have fallen by 1 percent since the election, the S&P has surged 10 percent. Something has to give, they say.

I suggest earnings are mis-measured by dollars. The stock market plays the role of currency insurance these days.