Tuesday, September 1, 2009

Nominal GDP and Earnings Growth

William Hester at Hussmanfunds has an interesting piece on nominal gdp and earnings growth. See chart below with the outlying current forecasts. In spite of the modest expected recovery operating earnigns are supposed to rebound strongly.
How important is the low base?
Is the relationship that strong once we remove the outliers in the bottom left corner?
Which variable is more likely to surprise? Eco on the upside or earnings on the downside?

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