Who Wants a Piece of Cake?

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The Q3 earnings season party has begun. Financials are usually the first to report and so far the big banks have been exceeding expectations. However, the financial sector is still expecting negative earnings growth for Q3. The Insurance sub-sector is the culprit, dragging Financials down due to the impact of the hurricanes. But a big pop in insurance company earnings is expected in Q4. The Consumer Discretionary sector is also forecasting a negative growth quarter, but a subsequent huge surge in Q4 - especially in the automotive sector - is anticipated. Overall earnings growth in Q3 will most likely be mid-single digits; not as high as the growth reported in the last two quarters, but not too shabby either. These earnings estimates are mostly baked into the market cake and barring any huge surprises, the market is already looking forward to Q4. The fourth quarter anticipates strong positive growth across all sectors, continuing to support the bull market. Can it get any better than this? Yes, corporate tax cuts would be the icing on the cake. Maybe it’s time for investors to dig in. Please watch Karyn Cavanaugh's latest comments on the markets and corporate earnings (Karyn appears at the 10 minute mark).

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