US profits melt away

The falling price of oil and the strengthening dollar have taken their toll on US corporate profits.

Analysts covering US corporate results for the fourth quarter of 2014 have been too bullish. That's no real surprise: in the past 39 years they have been too optimistic in all but six of them, says Avi Salzman in Barron's. On average, every January, they foresee total US profits growth of 12% for the firms in the S&P 500 for the year ahead. By December, their expectations have typically plunged to 6%. But lately they have been racing to the bottom.

In the past month, we have seen the biggest drop in 12-month forward earnings estimates for the S&P 500 since the 2009 slump, as the FT's James Mackintosh points out. As Wall Street analysts "are paid to be bullish", they must be really worried.

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Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.