CNBC Stock Blog

Second Half ‘All Comes Down to Earnings’: CEO

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As aluminum producer Alcoa gears up to kick off earnings season after the bell on Monday, analysts and investors are looking for a second half-of-year signal.

They’re not going to get one today, says Ashwani Kaul, CEO of Kaul Advisory Group.

“[Alcoa’s] probably going to match or slightly beat expectations, but it doesn’t really matter, right? Alcoa’s not the true indication of what’s going to happen in the market,” Kaul told CNBC’s “Squawk Box.”

When it comes to market signals, Kaul effectively rejects the one-company-as-market-bellwether concept. Instead, he takes a birds-eye view, citing the global economic slowdown and a volatile euro as major factors threatening corporate earnings.   

“It’snot just Europe’s economic slowdown; you’re seeing currency translation issues for companies like McDonald’s, Procter & Gamble, and Starbucks, who rely heavily on the euro.”

Against this backdrop, Kaul says the market’s direction all comes down to earnings. “If companies are able to execute and deliver now, its a really good sign for the markets for the second half of the year,” he said.

Kaul’s forecast for the S&P 500 index is $104 per share, which is down from $110 expectation that he had at the beginning of this year. 

On the bright side, Kaul thinks earnings can lift the stock market if reports come in better-than-expected. What’s more, analysts forecasts have come down “so much” in the past year, he said, that it’s likely more companies will beat market expectations.

If you’re still set on “bellwether” watching this week, though, Kaul thinks JPMorganChase is a better bet.  

“From a psychological perspective, I think it’s more relevant. People are going to look at their loan-loss provisions and the quality of their earnings as a sign on financials,” he said. 

JPMorgan is set to report earnings before the opening bell on Friday, July 13.

—By CNBC’s Jennifer Leigh Parker


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No disclosure information was available for Ashwani Kaul. 


Follow Jennifer Leigh Parker on Twitter @jparker741 .