The S&P 500 has continued to progress higher over the last six weeks, with the SPDR S&P 500 ETF gaining 16% from the downfall experienced last December. Even with the market’s insufficiency of primary growth foundations, almost all panic have subsided and is being replaced by the long lost confidence from last year. Still, the market is far too buoyant considering the ongoing situation. The possibility of a swift fall is still worthy of consideration.

The market is currently lacking companies going through diminishing revenue growth yet still has potential to bring in strong yields. Therefore, the SPY, as of now, is too dependent on companies remaining on top of the forecasts.

Based on the global growth outlook, the figures currently in the equities market is looking very promising and yet the possibility of disappointment in 2019 and 2020 has a high probability correlative to assumptions. Co-CIO of Bridgewater associates, Bob Prince hypothesizes that earnings in the country have a high chance of under-performing. A severe reduction in earnings growth corresponding to what is priced in is being predicted by Bridgewater as the impression for the SPY EPS based on and the S&P 500 has been experiencing depletion these past weeks thanks to the continuing risk of the global slowdown. Fascinatingly, the earnings per share estimates for the S&P 500 only goes through a brief lowering and is predicted to surge right after.

Meanwhile, the global slowdown we are currently experiencing may just be the most intense since 2015-2016. An economic decline is brewing in Europe with Italy already experiencing a slump and Germany following right behind it. Now, even though the market continuously produces a remarkable amount of earnings from across countries, proceeds are envisioned to rise up at a sturdy pace despite the deceleration of global growth in other countries.

By: Cyril Latrice Cajanding