Earnings season gets underway next week and expectations on the Street are not good.Christine Short, senior manager at S&P Capital IQ has crunched the numbers and tells us some alarming trends are emerging. Although she didn’t elaborate, we take it to mean she expects to hear more commentary like what we heard from Nike, which said slower sales in China dragged down earnings.
“(On average) we’re expecting earnings will be down 1% in Q2. If that’s right it will be the lowest earnings growth rate for the S&P 500 since the third quarter of 2009.”Although Europe and China may drag down earnings broadly, Short also tells us, her research has identified pockets of strength. They follow:Q2 Earnings Leaders - Y/Y % GrowthIndustrials - 9%Information Technology - 7%Consumer Staples - 1.3%The sectors mentioned above are the only sectors Short expects to end earnings season in the green. Within these sectors, Short says there will be sub-sectors to watch – that’s where she expects big winners.“In tech it should be all about computers and peripherals. They're expected to contribute 20% growth to the sector with Apple the big winner. In consumer staples, food retailers and food staples are expected to have strong points.
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