The ‘Fed Put’ Party Will Be Spoiled by Bad Earnings, UBS Warns
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Investors banking on the “Fed Put” keeping the equity rally going should be getting worried about the direction of earnings growth, according to UBS Group AG.
A decline in forward earnings growth for S&P 500 Index members below 0% would likely bring an end to the “bad news is good news” dynamic that’s helped propel the year’s stock rally, strategist Francois Trahan wrote in a note Tuesday. History shows the bullish effect from expectations of Federal Reserve stimulus ended after growth turned negative, he said.