With Q3 earnings reports upon us, not only is the question open of what companies will deliver on the bottom line relative to expectations but also of importance will be what they deliver on the top line as Q2 saw about 75% of companies beat EPS estimates but only 50% exceeded revenue forecasts. The market tolerated that for Q2 because of the hoped for earnings leverage potential looking forward but what will be the reaction for Q3 if it reoccurs? Those companies with more overseas exposure should have a better chance of delivering the revenue growth relative to those with more US centric businesses. The G7 communiqué reiterated “excess volatility and disorderly movements in FX rates have adverse implications for economic and financial stability.” This was seen as a soft way of dealing with US$ weakness and the $ is lower as a result.
