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Dollar's recent strength will hit this coming earnings season, JPMorgan strategist says

Europe is fundamentally over banked: Strategist

With the third-quarter earnings season fast approaching, one JP Morgan strategist has told CNBC that the prospect of bottom-line growth is tantalizingly close.

Alcoa reports on Monday October 10 which for many market watchers signals the starting gun for the U.S. reporting blitz. David Lebovitz, global market strategist at JPMorgan Asset Management, said Monday that he expects year-over-year earnings growth to print in negative territory, as firms continue to feel the drag of a previously strong dollar.

"I would be surprised to see revenue growth this quarter. It takes about two years for the effect of the dollar to work through the system," he said.

"I think we are still experiencing that and for a move in to positive earnings growth, I'm more in the fourth-quarter camp."

Lebovitz told CNBC that the headwind of lower energy prices is also beginning to fade and that could be another positive for investors who are bullish on stocks with a longer horizon.

"Energy companies should be taking fewer write-downs and we are seeing margins hanging in there which is a positive sign, given our view that wages will pick up," he said.

"If companies are able to beat expectations, that will point to further upside for the equity market."

Trump greater than Fed

On what could shift market sentiment outside of third-quarter earnings, Lebovitz said the U.S. election is a bigger factor for him than any moves or commentary from the U.S. Federal Reserve.

"If (Republican presidential candidate) Donald Trump starts to get more momentum in the polls that is going to move the market, simply because it is priced for a (Hillary) Clinton victory right now," he said.

"To me the Fed in December doesn't represent a risk. I don't think they will do anything in November but come December they have been priming the pump for this (rise) all year," he later added.

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