汇丰银行-全球-股票策略-全球股票策略：盈利——已过了最差的情况-217-22页.pdf

Global equity markets have rallied hard this year, up 8.5% YTD. We continue to see upside and

believe the rally may have another 9% to go before the end of the year. So far, however, the

catalyst to help steady the deterioration in sentiment. With the earnings season now well under

way in both the US and Europe we take a deep dive into the earnings outlook for these two

markets, and with the help of our proprietary natural language processing identify some of the

key themes among the earnings calls.

In summary, we believe the worst may be behind us for both US and European earnings. The

US has greater potential for an upside surprise – we view margins and earnings as more

resilient than many think. We also find it encouraging that in both the regions the price reaction

to beats and misses has improved quite significantly. We take this as a signal that market

expectations have come down to more reasonable levels, which should improve the risk-reward

for companies around earnings announcements.

around a US-China trade deal and HSBC’s analysts expect a meaningful rebound in the

memory market in Q2-2018 – much earlier than the market is anticipating – as companies take

The second point is that earnings estimates have been downgraded notably already and we

believe the worst could now be behind us. Our top-down models call for US and European EPS

growth in 2019 of 9.6% and 6.7% respectively. But the biggest upside surprise potential still lies

in the US, where we now see consensus as meaningfully below our own estimates.

Indeed, one of the surprising trends has been how European earnings growth estimates have

now surpassed those of the US – a feat rarely achieved. The only time in recent history when

Europe actually delivered stronger earnings was in 2017 and this was against a backdrop of

underlying dynamics favor US earnings. Additionally, top-line growth estimates have remained

remarkably stable, suggesting the fundamental outlook holds strong for US corporates.

The ongoing earnings season also points to a more favorable backdrop for US corporations.

In the US around 75% of companies have beaten EPS estimates, broadly in line with long-run

in over three years, and considerably below the average of 58% since 2015. In terms of sectors,

Healthcare and Financials have been the key laggards, while Commodities, IT and Consumer

names have provided the highest percentage of beats.

Using our proprietary natural language processing we have scanned through nearly 60,000

transcripts in the US and Europe going back to 2002 to identify some of the key themes and

trends in the latest round of earnings calls. Some of our key findings include: