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There seems to be a lot of angry rumblings from market pundits and participants about the bad news being “priced in” during this relentless move down. The GE news hit and everyone said “this was expected”. The GDP figure hit and everyone said “this was expected”. I disagree. Analysts were expecting a -5.4% drop in GDP this morning so how can anyone say -6.2% was “priced in”? That makes no sense. Most analysts are still expecting S&P 500 EPS of $63 this year. We’ll be lucky if it hits $50. Expectations are still too high across the board and that’s assuming things don’t get worse.

It’s all about earnings. And as long as earnings expectations remain high the market will not be properly “pricing in” anything.