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Volatile Estimates in Europe by Jennifer Thomson, Gavekal Capital
Changes in sales and earnings estimates have historically ranked fairly high in our factor analysis– a methodology we employ to gauge which variables have the greatest influence on/ correlation with moves in the overall market.
Generally speaking, both variables have improved (albeit marginally) since March:
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MSCI The World Index
Most of this improvement is the result of the more positive growth outlook for North American companies– and the dramatic turnaround in earnings estimates, in particular:
MSCI North America
Estimates for MSCI Pacific constituents have steadily improved as well– just not as sharply as those for their North American counterparts:
MSCI Pacific
In Europe, however, the trend toward a more positive outlook seems to have stalled and reversed as the change in both sales and earnings growth estimates has turned negative once again:
MSCI Europe
The recent moderation– following such a sharp improvement in estimates (on a three month basis)– suggests that MSCI Europe’s correction could continue quite a bit further:
Updated on