The two most glaring examples are 1994 and 2011.
We've written about these years before as examples of years where S&P 500 earnings growth was strong and yet the S&P 500 return for that calendar year was minimal.
1994 was the year Alan Greenspan surprised everybody with 6 Fed Funds rate hikes, starting in early February 1994, but it was also a year where Clinton's Healthcare reform failed, and then later in 1994, the Mexican peso was devalued and Orange County defaulted thanks to leveraged bets on the short end of the yield curve.
That year S&P 500 earnings grew 20% and the S&P 500 returned 1% on the calendar year.
Don't forget too 2011, when the Greek and euro debt crisis reared its ugly head and the S&P 500 corrected 20% from May to early October 2011.
S&P 500 earnings grew 15% that year, led by Energy, Technology, while Financials and Housing were still digging out of the 2008 mess, while the S&P 500 finished about 2% higher.
In the mid-December blog post before the 2018 forecasts, it was noted that readers haven't seen a year of "P/E contraction" since 2011.
While the market has pretty much adjusted to 3-4 Fed Funds rate hikes this year, the move in the 10-year Treasury yield already in the first 5-6 weeks of the year has been noticed. 2.40% to 2.84% is still manageable but over the 2013 highs of 3.00-3.03% and that will get people's attention.
Our forecast of an S&P 500 return of 7-12% this year means that the year will fall far short of expected earnings growth for the benchmark, with S&P 500 earnings growth of 18% expected.
We'll see how the year unfolds. 1994 - with rising rates at the short and long end all year - saw the market trade like it was running a marathon with a piano on its back.
Kind of like the last two weeks.
Thanks for reading…