There is no question that this earnings season will at least meet expectations, thanks to tax cuts and economic growth, but investors should look deeper in the trend of profit margins for clues whether double-digit growth can sustain beyond the first half of 2018, said Mike Wilson, Morgan Stanley’s chief U.S. equity strategist.
“We will be watching for early signs of margin pressure this reporting season as we suspect that headwinds will not come all at once,” Wilson wrote in a note. “Robust earnings should help move the market higher, but watch for early signs of margin pressure as a harbinger of earnings growth deceleration later this year.”
This article was provided by Bloomberg News.