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The Tell: Stock market headed for ‘nasty surprise’ if this signal proves correct

Anticipating a cut in U.S. corporate tax rates, Wall Street analysts late last year ratcheted up earnings estimates for 2018, forecasting an 18% increase in profits, but declining cash-flow growth remains problematic for markets, according to Société Générale’s Andrew Lapthorne.

In a note to investors, he pointed out that despite continued economic growth and a tax windfall, U.S. equities have underperformed the rest of the world since Dec. 15.

The S&P 500 SPX, +0.81% the large-cap U.S. equity benchmark, is up 5.6% year to date. The iShares MSCI U.S. ETF ACWX, +0.53% is up 5.9% since the start of the year.

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