The World Bank's downgrade of East Asian -- particularly Chinese
-- growth outlook will likely have a bigger play today given the
absence of any significant economic release on the home front. But
it's hardly surprising given what corporate management teams have
been talking about and will likely become a chorus in the third
quarter earnings season that gets underway with
) report after the close on Tuesday.
ALCOA INC (AA): Free Stock Analysis Report
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The earnings report from
) around the same time as Alcoa's release will likely shed more
light on the East Asian growth question given the fast-food chain's
substantial Chinese exposure.
Stocks have pushed to new multi-year highs in recent days on the
back of monetary stimulus from the Fed and other central banks. But
can those gains be sustained should the corporate earnings picture
turn out to be weaker than what the market is expecting at present?
The question is not so much about the earnings results for the
third quarter, but the outlook for the fourth quarter and beyond.
Unlike the third quarter when earnings are expected to decline for
the first time in more than 10 quarters, current outlook for the
fourth quarter is of a strong earnings rebound.
Consensus expectations for full-year 2013 also remain quite high,
with earnings growth in the low double digits. Given what we have
heard recently from companies like
) and others, those growth expectations appear to be on the high
side and vulnerable to downward adjustments.
The market has been taking negative revisions to earnings estimates
in the stride with the help of easy monetary policy. But can the
trend continue once negative revisions accelerate in the coming
days? Hard to tell a this stage, but we will know soon enough as
the reporting season gets into high gear in the coming days.