1. Cautious start of the week, with financials the star performer.

“We believe European bank equities remain too cheap and will gradually earn a re-rating higher as profitability gains are proven to be more sustainable than the market currently assumes,” Keefe, Bruyette & Woods analysts led by Andrew Stimpson wrote in a note.

The Stoxx 600 Banks Index has advanced 22% this year, more than any other sector in Europe, and closed last week at the highest level since August 2015. Even so, valuations remain low relative to the broader regional benchmark, suggesting to some that a strong earnings season can unlock further gains.

2. The million dollar question: What is currently priced in the market?

Consensus expects about 3% EPS growth in 3Q. (yellow)

However, consensus is pricing much higher EPS growth for the following quarters.

3. Morgan Stanley’s scenario analysis for the S&P500, based on their forward earnings projections in 2025 and 2026.

With EPS growth projection at +13% for 2025 and +10% for 2026, their base case for the S&P is only 5400 !!

4. What are the consensus 12 month forward P/E valuations?

5. Expectations for Eurozone EPS growth is improving.

The expectations for median earnings growth see significant improvement for Germany and France next year.

6. US 10-year yields close to Goldman’s line in the sand.

Goldman Sachs warned that 4.30% could spark risk aversion.

7. “As of today, it’s Apple semi-Intelligence”

Interesting view from Bob O’Donnell, tech analyst.

“Apple is facing some of the same issues that the entire industry is facing, which is convincing consumers that this AI stuff matters.”

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