As we wrote yesterday, it is our sense that the Japan 4Q GDP data miss, which is pre virus outbreak, is just a taste of what is to come in terms of downside surprises to growth. The warning from a member of the $1 trillion dollar tech club is as big a red flag as any for a market priced for perfection. Although in the current market environment where investors are expecting the hit to growth and earnings only to delay the forecast recovery and for policymakers to offset any jitters, the tendency will likely be to look through Apple’s 1Q downgrade post the initial reaction. But, Apple’s downgrade is likely just the tip of the iceberg when it comes to earnings downgrades.
