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So far, Q3 earnings have been coming in better than expectations.However, Morgan Stanley, who has maintained a bearish tone on stocks, thinks things could be a lot better. Here’s what equity strategist Adam Parker had to say:
Roughly 42% of S&P 500 market capitalisation has reported Q3 2011 earnings. Aggregate earnings have exceeded consensus expectations by 5.4% driven primarily by financials. Excluding financials, the beat has been 1.9%, which is below the 5.3% beat in Q2 and 6.2% in Q1. So, while trends are still positive, there has clearly been less upside this quarter than the prior ones. Revenues have exceeded expectations by 1.5%.