Guest Post: What If Corporate Earnings Have Topped Out?

Via Charles Hugh-Smith of OfTwoMinds blog, The market may have reached cyclical highs in corporate earnings. That does not bode well for additional stock market advances.   If corporate earnings have topped out, what will push the stock market higher?The usual answer is "central bank intervention," but history suggests that in the long run, the market eventually correlates to corporate earnings. Earnings up, market up; earnings down, market down.   Frequent contributor B.C. recently shared some insightful charts of S&P 500 (SPX) earnings. Here are B.C.'s comments on the first chart:     Note that real earnings (CPI adjusted) in '09 fell to the levels of the 1920s-30s, 1890s, and 1870s, and to the levels of the 1970s in nominal terms. A "typical" cyclical decline would take earnings back to the long-term trend from 1932 and the log ...