Earnings expectations continue to fall in US and Europe

US Europe earningsTC

After the damp squib of the Chinese plenary session, the ongoing weakness in manufacturing surveys offers little comfort. This week’s focus likely to be the US, where a 50% market expectation of a December rate hike sits a little uncomfortably with multiple softening indicators. European PMIs and monetary outlook remain relatively favourable, while 2016 EPS growth expectations now sub-10% in US and Europe. Despite increased US tightening expectations low rate winners remains a powerful market theme.

Europe’s recovery remains far more tangible as structural reforms also look to have a higher chance of near/mid-term effect. Furthermore, Europe still 500bp below pre-crisis ROE and consequently it remains our favoured regional play.


About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.