The rebound in equities picked up steam on Friday following better-than-expected news. Better than expected is all that can be said about the news, however, because the PCE price index accelerated on a YOY basis at the headline and core levels. The news is a dead weight for S&P 500 earnings and points to another aggressive 75 basis point interest rate hike from the FOMC in the coming week.

The news that no one is talking about is the outlook for earnings. While the earnings reports last week were better than expected the margin of outperformance was very tepid and the forecast for the next quarter got worse. The consensus figure for Q4 2022 earnings growth for the S&P 500 is hovering near 0.5% and on track to fall below 0.0% before the start of the reporting season. Worse, the consensus figures for next year are in the same decline and suggest there will be little to no earnings growth in calendar 2023.