US Q4 2019 earnings season starts decently well.

Highlights:

• After 9% of the US results are out, both median yearly growth and surprises vs consensus look decent. Historically, this bodes well for the rest of the season.
• Earnings growth consensus for Q4 2019 has been declining to become slightly negative: from 11.5% one year ago to -0.5% yoy. Consensus for sales (+4.3% yoy) remained broadly stable.
• A weaker trade-weighted US dollar, higher oil prices, bottoming capacity utilization and recovering margin proxy (CPI/unit labor costs) all signal earnings to have a mid-single digit growth this year.
• This would also be facilitated through base effects as earnings growth in 2019 was flat.
• In the euro area (EA), increased credit impulse, better IFO momentum, slowing labor costs increase and better macro surprises are also pointing to a bottoming earnings momentum, provided that exogenous risks stay at bay, as we expect.
• We maintain OW on equities, albeit with a reduced exposure after the recent rally.

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