New Constructs' Value in 60 Seconds: Earnings rise is an illusion & correction is coming

23 Jun 2023 · 1 min

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Corporate earnings are rising on paper but actually deteriorating, according to New Constructs. Any rally fueled by Fed optimism will be temporary. When investors catch on to the misleading numbers, a market correction is coming, hitting the most overvalued stocks hardest.

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On a fundamental level, we have another false flag, which is more alarming. And that's that the rise in earnings is an illusion. Earnings are actually getting worse, not better. That is where the bigger risk is because, look, we could probably have a relief rally on the debt thing and we're having a false rally on the Fed thing. And we'll have a Relief correction when people realize these things are wrong, but the correction can be deeper, especially for stocks whose earnings are most misleading. But the correction will be deeper overall because fundamentals are also misleading.