Unexpectedly Intriguing!
June 13, 2011

From time to time, we strive to describe an economic phenomenon taking place through a single chart or picture. Here's what we came up with to illustrate why stock prices have been either flat or falling over the last several weeks:

Snapshots of the Expected Future For S&P 500's Trailing Year Earnings per Share, 2009Q1 Through 2012Q4, as of 12 June 2011

The bottom line: investors focus on the future. When they shift their focus from one point of the future to another, such as from the fourth quarter of 2011 to the second quarter of 2012, as has taken place during the last month, the change in their expectations affects stock prices today.

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