Say what you want about Asia slowing; Europe and U.S. futures rallied as soon as the European markets opened, led by European banks. The euro has rallied, as have commodities. More stimulus and a smooth transition to an European Union/European Central Bank bailout for Spain are trumping a weaker Europe, for the moment.
Market could reverse if U.S. September ISM, out at 10 a.m. ET, is notably weaker than expected (49.5 is expected).
Earnings: Growth is decelerating, but it's still growing. Much has been made by bears about the deceleration in earnings growth (third-quarter earnings growth will be slightly negative at down 1.8 percent), and it's true, the numbers are slowing:
S&P 500 Earnings (Year-Over-Year Growth)
2009 down 1.9%
2010 up 38.5%
2011 up 16.1%
2012 (est.) up 3.9%
2013 (est.) up 11.7%
Source: S&P Capital IQ
Three points need to be made:
1) Reversion to the mean: Earnings growth was extraordinarily high in 2010 (up 38.5 percent!) after the great financial crisis of 2008-2009; the historic norm for earnings growth since 1999 is 7.2 percent.
2) Four percent growth in 2012 is much less than two years ago, but it's still positive. And while 11.7 percent growth expectations for 2013 is likely high, even if it ends at half that, it is still growth.
The most important question? Is the third quarter the trough in this earnings cycle? We don't know yet.
3) The 2012 estimate of $102.88 for the S&P 500 is an historic high. That's right: Despite all the hand-wringing, large American corporations have never been more profitable. Still, the lack of top-line growth is very worrisome.
Elsewhere:
1) China's state manufacturing Purchasing Managers' Index was below 50 for the second straight month (indicating a contraction), India's PMI is at a nine-month low, and Japan's Takan manufacturing report was weak, as well.
2) Transocean shares rallied 3.1 percent pre-market after a Brazilian court partially rescinded a ban on its operations. Under the ruling, Transocean can continue operations at nine rigs, except at the Frade oil field — the site of an oil spill last November.
3) BHP Billiton rises 1 percent after targeting copper production growth at 10 percent or more a year through mid-2015. Despite concerns of a slowing global economy, BHP is confident of long-term copper demand from China and India.
—By CNBC’s Bob Pisani
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