Market disconnect
S&P 500 returns since the 2009 trough have vastly outperformed prior expansions, driven by earnings growth and not economic performance.
GDP growth in the six quarters following the June 2009 trough trails prior expansion periods by 3.2 percentage points.Source: Bloomberg LP
Comparing average change in unemployment to average S&P 500 returns over 10 recessions between 1949 and 2001, the correlation was -0.87, compared with -0.59 for the current expansion.Source: Bloomberg LP
The most recent S&P 500 cumulative post-trough return ranks third among the 11 recessions since 1949.Source: Bloomberg LP
In 2009, monthly S&P 500 earnings reached their lowest levels since the late 1970s. Since the June 2009 trough, though, earnings have experienced significant growth.Source: Robert J. Shiller
