00:00Max Kettner of HSBC writing further likely strength in U.S. equities should be enough to prompt a broader risk on move.
00:07Max joins us now for more. Max, good morning, sir.
00:10You've talked a lot about how the bar for growth is low enough that we can deliver some upside surprises.
00:14Can you say the same thing about earnings into next week with Big Tech on deck?
00:19Yeah, good morning. Thanks for having me. Look, I do think so.
00:22I think actually the bar when we look at XTech, for example, is extremely low.
00:26Look at when we headed into the earnings season, you guys were just talking about banks and about the financials.
00:32We had a sort of minus four percent quarter of a quarter earnings growth expected from consensus.
00:37So when you exclude tech, actually consensus was saying that earnings are going to go down sequentially.
00:42And bear in mind, that's a nominal number, whereas, you know, all the top down GDP proxies, GDP now, all of the stuff is trending around three to four percent for Q3 in real terms.
00:52So we're sort of talking maybe six percent nominal GDP growth and consensus are saying earnings are going to go down.
00:58That really means there is a genuine risk that actually the earnings beat rate, not just in tech, but in the broader market, the earnings beat rate will be even better than in the second quarter.
01:09And that would then be the biggest earnings beat rate since COVID.
01:13So for all those people like, oh, you know, we're all just firing on one cylinder.
01:17It's just tech.
01:18No, it's not just tech.
01:19In fact, we are seeing we're all faced and underestimated strength elsewhere as well.
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