Here is a chart from Zero Hedge which showed that the gap between GAAP and Non-GAAP earnings is at its worst since 2008.
The level of write-offs are absolutely horrendous.
On the other hand, this chart from Goldman Sachs is suggestive that these earnings "gaps" occur at the height of bear markets. If we are already through the worst of these writeoffs, could such a development be actually equity bullish?
Urban Carmel also pointed out that outside of recessions, the "GAAP gap" actually isn't that bad on a historical basis.
Interpreting the GAAP earnings quality gap is like the Rorschach inkblot test. Bullish or bearish? What`s the real story?
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As a reminder, here is a sample of some of past posts:
- Why I am bearish (and what would change my mind) May 2015
- Relax, have a glass of wine August 2015
- Why this is not the start of a bear market September 2015
- The reason why the bulls should be cautious about a January hangover December 2015
- Why this is a correction and not a bear market January 2016
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