Alice N. Sanders
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Alice N. Sanders in US Markets,

This ‘warning siren is blaring,’ but that’s not stopping the Wall Street hype machine


Alarm bells may be ringing, but investors don't seem to be listening.

While there have been plenty of reasons to lighten up on stocks lately, S&P 500 companies keep delivering the goods when it comes to profits. Or have they? Yes, corporate earnings growth is up double-digits from the second quarter a year ago, as the energy sector‘s recovery from the oil-bust levels of 2016 continues to be a driving factor. And, sure, the top line has also enjoyed a nice boost But Wolf Richter of the Wolf Street blog says the numbers blur the reality, and he offered up this “warning siren” as our call of the day. “The Wall-Street hype machine is cranking at maximum RPM to propagate the great news that earnings are soaring, and that this is the reason why stocks should also be soaring, and forget everything else,” Richter wrote in a blog post over the weekend. “The hype machine carefully avoids showing the bigger picture which is dismal for earnings and ludicrous for stock valuations.”