- As of today, almost 10% of companies have reported their earnings. Median sector surprises have so far been positive in the US and Europe (+14%) and flat in Japan.
- Q2 numbers will be devastating but should represent the bottom in this cycle crisis, with annual earnings growth likely turning positive again in Q1 2021.
- We cannot exclude further downside revisions to consensus but in our base scenario they should be limited: Q2 numbers are already deep in red while macro indicators have improved.
- Resuming activity will trigger a rebound in Q3 macro data, sustaining earnings revisions. But sluggish demand amid the risk of a second Covid-19 wave will keep the recovery subdued.
- Starting from the autumn the earnings momentum could lose traction. The Google mobility indices have recovered but the acceleration is already losing speed.
- Having said this, fundamentally we can still afford a limited further negative revision from here (- 3 to -4%) without having to reduce our 12-month total return targets (currently near 5%).
- We maintain a limited overweight in equities.