Yesterday, Deutsche Bank's equity strategist David Bianco joined Goldman's David Kostin in warning that Friday's selloff was just the beginning, predicting that an "8-10% decline in the S&P looms" as a result of "manic" levels of PE relative to VIX, and various other indicators confirming just how stretched the market has become, coupled with unprecedented complacency and a record low VIX. 

But it's not just the market that DB is worried about: in a separate report, Bianco also warned that "3Q S&P EPS results will not impress" and that companies will be forced to lower 2017 expectations.

This is why Bianco thinks the E in PE is about to slide even more:

Bianco also points out some key macro indicators which in the recent month have seen a dramatic swoon as the US economy once again appears on the verge of a recession:

Bianco's conclusion: "We expect 3Q reporting to lower btm-up 2017 EPS most at Financials, Staples, Con Disc and Industrials. The general expectation for 2017 S&P EPS will fall from $130 to $125-130."

This should not come as a surprise to regular readers: just on Friday we warned that "A Flood Of Profit Warnings Just Crushed The "Earnings Recovery"." In the days ahead expect the flood to become a full-blown deluge, now that the seal has been broken, and more companies feel liberated to tell the truth, especially with the Hanjin bankruptcy providing a convenient backdrop on which to blame the "unexpected" collapse in Q3, Q4 and so on EPS.