Earnings season commences in earnest. Have expectations been lowered? As noted last week, Bloomberg reports that 3Q results should rise by 4.2% for the quarter, down from a 7.9% expected growth projected in mid-July.
Bloomberg further states 37% of S & P 500 companies are expected to report lower earnings per share than the previous year for this quarter, compared to 26.6% last quarter.
This data does not support higher equity prices, especially if monetary policy sentiments have again changed back to being more restrictive.
Speaking of which. the markets are now suggesting about 46 bps of additional easing by year end. The narrative is beginning to rise there may be no change in policy at the November meeting. One week ago, the markets had fully discounted another 50-bps cut.
What will happen this week?
The economic calendar consists of retail sales, import/export prices, several housing statistics and industrial production/capacity utilization.
Last night the foreign markets were mixed. London was down 0.52%, Paris down 0.84% and Frankfurt up 0.24%. China was down 2.53%, Japan up 0.77% and Hang Seng down 3.67%.
Futures are flat. The 10-year is up 6/32 to yield 4.08%. Oil is down about 4% as the Washington Post reports that Isreal will not hit Iranian oil or nuclear instillations.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
