The market is telegraphing that 2019 earnings growth will not be as strong as anticipated

The stock market can serve as a voting machine on next year's earnings, and for the moment, it is signaling doubt that companies can deliver on the expected earnings growth of roughly 10 percent and revenue growth of roughly 6 percent for 2019.

Why? Because the macro picture has gotten considerably more complicated — and confusing.

Six months ago, we were dealing with a strong U.S. economy, tax cuts, and less regulation, but not too much else. Now, however, the markets are facing an unusually large number of "known unknowns": issues we know about but don't know yet how serious they will become. It's China's slowdown, the tariffs, the Fed hiking too aggressively, but also a host of smaller issues, like a strong dollar, higher labor and raw material costs, a populist government in Italy, and the possible isolation of Saudi Arabia.

However, the main macro concerns are very clear: China slowing and the Fed hiking too aggressively. Those two have everyone believing the glass is half empty.

How much less? The bulls think earnings growth will be 7-10 percent in 2019, but the market seems to be telegraphing that it is unlikely to hit that target. Look at the valuation multiple: the S&P 500 is trading at a multiple of 15 times 2019 earnings estimates. A month ago, it was at a 16.5 multiple.

Since the multiple is a reflection of the price investors are willing to pay for a future stream of earnings, this multiple is telegraphing that the market believes earnings will be lower than anticipated next year.

So, instead of 10 percent earnings growth, the market seems to be anticipating earnings growth of roughly half that.

Where is the bottom?

"The market has already taken a significant haircut to account for a lot of these fundamental concerns," Alec Young, managing director of global markets research at FTSE Russell, told me.

He is anticipating another final decline of about 3 percent: "If we get another swoon, the risk/reward will have improved to the point where buyers have stepped up and enough macro risks will be priced in." He admits though, that the markets will often overshoot if there's sufficient panic.

Finally, some traders are bringing up another risk: the elections. The markets have come to believe that the Democrats will likely take control of the House. But if they take control of the Senate, too, they may alter or reverse the tax cuts, because many Dems believe they have primarily benefited corporations and the stock-owning class. Dems want infrastructure projects, and it's likely they will push some kind of tax hike to pay for it.

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