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US EARNINGS GROWTH VIEWS STRONG, BUT EQUITY POSITIONING POINTS TO COLLAPSE - DEUTSCHE BANK

Expectations for first-quarter S&P 500 earnings growth appear "exceptionally strong," but a measure of equity investor positioning is "significantly underweight" and in line with an "imminent collapse" in profit growth, especially for groups like software and financials, according to Deutsche Bank's chief strategist, Binky Chadha, and other strategists at the firm.

"In the face of the war, AI and growth gloom, equity positioning had declined significantly, albeit not to the bottom of its historical band," they write in a research note this week.

Deutsche Bank strategist Parag Thatte said Thursday that the bank's equity positioning measure reflects a composite of various positioning indicators.

The strategists note that equity investor positioning "has historically been well correlated with earnings growth and is in line with the latter turning negative imminently, a far cry from the strong growth we expect in Q1."

Expectations for earnings beyond the first quarter are also strong, they write, noting that over the last month, consensus estimates for the second quarter and the rest of the year have been rising, helped in part by strong expectations for technology and energy sector earnings growth.

LSEG data shows analysts expect first-quarter S&P 500 earnings to gain 13.9% from a year ago, and that they expect overall earnings growth of 19.3% for all of 2026.

(Caroline Valetkevitch)

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