The third-quarter earnings season is unlikely to be very good as a result ofweak growth expectations, recent gains in the euro and a rise in input costs,but nevertheless, consensus expectations could still prove overly pessimistic,analysts at Exane write in a note.
Backing their view that any earnings disappointment could be contained, theycite how the run-rate of earnings growth "isn't cratering", labour costs arecontrolled and leading indicators for September have been rising.
"We think the consensual concern about the earnings season might be overlypessimistic. Moreover, if policymakers dominate the headlines like they did overthe summer and/or leading indicators continue to improve, then earnings trendscould be a sideshow once again. Spain, China and the US are potential riskfactors to watch out for," they write.
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