By Robert Lenzner, Forbes Staff But when? It’s the combination of Quantitative Easing plus the ability of large public multinationals to increase their profits on revenues that has powered this market— call it the Bernanke market, if you will. Think about it. 14% profits on revenues cannot continue indefinitely– especially if QE gets a bit of rejiggering sometime this year or next, as some regional Fed bosses are murmuring about.In fact, since World WAr 2, corporate profits after tax seem to retreat often enough to a range between 5% and 9% dependinmg on the severity of the economic cycle. So, I thought it was about time to consult the nature of the early warning signals that are about and see how they might play in the financial markets today. And I spotted this early warning signal NUmber One in the HUssman Funds founder John Hussman‘s weekly market comment of April 8; “Companies issuing negative earnings preannouncements for Q1 2013; 78%.” Holy Cow! THe advance indications from companies themselves about their first quarter 2013 earnings are for a decrease in profits per share– not an increase. Horror of horrors; the bearish Hussman is even considering the possiblity of the nation drifting into another recession. Just think what that will do to the unemployment figures– much less corporate profits. To buttress his case, Hussman raises the issue most sophisticated investment advisers are wondering, sometimes aloud– about the “successively lower levels” of economic activity that result from each new bout of QE. Today, the $85 billion QE is particularly suspect in the light of the unexpected weakness in job creation (88,000-last month)and the softness in the Chicago Purchasing Managers index. Here’s Hussman on April 8, writing ” For my part, I continue to expect the U.S. economy to join a global recession that is already” starting in much of the developed world. In light of this dark view it’s no surprise that Hussman scoffs at the consensus view that stocks are cheap at 14 times earnings– but “are instead strenuously overvalued.” Overvalued, you see, in the wake of the very bubble created by the Fed’s QE policy. That 14% corporate profit rate– you eee–is to some extent the unusual result of the Fed maintaining interest rates at near zero. At zero, at 2%, corporations can borrow money to do their business and still report very solid profits, thank you very much. And yes, if interest rates go still lower, profits might temporarily move slightly higher– all the while increasing your downside risk at the certain to happen reversion to the mean of corporate profits. THere’s other signs of the top as well. One of my newest financial gurus,John Maulkin of Dallas, sent me the April 9 King REport, from M. RAmsey KIng Securities, Inc. which woke me up to a quite worrisome technical sign in the market. ” A disturbing sign for equities is financial stocks have turned soft. Since 2009, financial stocks have led stocks. The XLF( financial stock ETF index) tends to peak a few weeks

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