Macroeconomic indicators of global demand and growth continue to pretty relentlessly tank week over week, and the 2015 earnings forecasts of S&P 500 companies (burgundy line bottom chart) are dropping along for the ride. This makes some sense. Accounting gimmicks aside, nominal GDP and corporate revenue/sales have traditionally been reliably correlated. After all, corporations can buy back their own shares to raise earnings for a while, but it’s much harder to fabricate sales and revenue in a world of falling demand.
Another real world indicator, the price of copper has also offered an historically reliable read on global demand trends. Since breaking below the 2.90 a pound level in December (dotted line below) which has proved key support in the past two market cycles, the diagnosis from Dr. copper: global demand is weakening as it did moving into the Great Recession in 2008.