S&P 500 EPS unlikely to keep outpacing “macro” profits

The profits of Corporate America have shrunk during the past four years according to revised estimates recently published by the US Bureau of Economic Analysis (BEA). By contrast, S&P 500 operating earnings per share (EPS) have grown by nearly 50%. Despite this healthy gain, we think that the latter will falter. This feeds into our forecast that the index will end this year at 2,500, which is well below its level now.