We are now entering earnings season once again. Pre-announcements have been the second-worst seen over the past decade.

Negative EPS Guidance Approaches 10 Year Record https://t.co/ZtS4L0fEqd pic.twitter.com/ZhgRxeQiqb

— Jesse Felder (@jessefelder) April 1, 2016

This has analysts lowering estimates. In fact, they’ve been lowered so far quarterly earnings now look to fall all the way back to 2009 levels.

Bottom-Up EPS Values Dip to Lowest Levels since 2009 https://t.co/EEf4eg19nX pic.twitter.com/5awngY6jPd

— Jesse Felder (@jessefelder) April 2, 2016

For the trailing twelve months earnings are now back to 2011 levels…

2015 S&P 500 GAAP earnings were $86.48, which is slightly lower than 2011, when the S&P 500 finished the year at 1257 (14.5x earnings)

— Scott Krisiloff (@Skrisiloff) March 30, 2016

…even while stocks remain 75% above their own levels from back then. Taken together you get a price-to-earnings ratio of 24, higher than any other time over the past several years.

And there it is: Now officially the highest p/e (24) in years for SPX pic.twitter.com/KKLuP0wGmA

— Jesse Felder (@jessefelder) April 3, 2016

It should go without saying that extreme valuations and falling earnings are not a bullish recipe for stocks.

'S&P 500 is overvalued and earnings continue to trend downward. Negative for stock prices.' https://t.co/mFxfJJqHsw pic.twitter.com/CBBx1i6CyK

— Jesse Felder (@jessefelder) April 4, 2016

So the fundamentals are not supportive of higher prices. What then has been driving them higher in recent weeks?

"When stocks are rising for no better reason than that they have risen, the greater fool is at work."

--Seth Klarman

— La nuit sera calme (@NuitSeraCalme) April 1, 2016

And the greater fools are none other than the companies themselves…

93% of net buying in equities this year is buybacks https://t.co/ecSzNvIDY5 ht @NuitSeraCalme pic.twitter.com/XaaqPBUA4Q

— Jesse Felder (@jessefelder) March 30, 2016

…for now. If earnings don’t turn around soon (and corporate spreads narrow), it’s going to be hard to maintain the current pace of buyback activity.

@historysquared @jessefelder Need one more data point: corporate debt issuance in the same period

— 地球公民 (@earthizen) March 31, 2016

Just by glancing at the chart above it’s easy to see that companies have been the greatest fools of recent market cycles, expanding their buyback activity at the highest valuations and reducing them during the most attractive ones, hardly a legitimate theory of investment value. This cycle appears to be no different.