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John Butters' Concerns About 4Q

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    Factset senior earnings analyst John Butters gives his outlook for 4Q earnings

  • Duration 3:47
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And fourteen minutes well a strong start earning season from Alcoa.

A big reason for today's gains but my next guest has substantially reduced his estimates for fourth quarter EPS growth from nine point 2%.

To two point 7%.

John Waters -- -- senior earnings analysts and back -- But John you are right about the third quarter numbers you predicted many of the biggest companies were gonna come -- where they did.

Why is so concerned about the fourth quarter.

Well as we head and -- earning season as you mentioned we're expecting growth of 9% of the start of court that's come down to 2% today.

As seven of the ten sectors have seen a decline in expectations.

We seen -- biggest cost estimates in the materials.

Information technology and financial sector so again analysts have taken down their estimates quite substantially for the fourth quarter.

-- John you talk about ITL and a focus on not just for a second because one of the things they're pointing to live with regard -- he would that sector gained 13% last year.

Is apple you say that apple is going to be a negative piece of the story why.

-- for several years Apple's been one of the largest contributors to growth for the technology sector for a few quarters it was the largest contributor the S&P 500 as a whole.

But for the first time in nearly nine years Apple's expected report a year over year decline in EPS.

I'm in within -- technology sector was seeing weakness in many other industries as well so again expected to be a down quarter for the technology sector one of three sectors expecting -- of the year decline in earnings.

Another some other negative sectors I wanna bring -- one positive any mention that is the financial sector that was the best performing sector of 2000 while we're gonna her for Wells Fargo coming on Friday.

That using -- finances are still going to be a winner in 2013.

-- the group 26%.

Last year can may keep up double digit growth like that.

Yeah -- -- for this earnings season financial sectors expecting 16% growth it's it's expected we have the highest growth of all ten sectors.

And if he did a little deeper -- the numbers at the industry level seven of the eight industries are expecting growth.

Five of -- -- industries are expecting double digit growth.

The real drag in the financials this -- -- the insurance industry we've seen numbers come down quite a bit over the three months due -- losses related parking sandy.

If you exclude the insurance -- -- -- industry growth for the financial sectors would be up over 40%.

Okay and then you also mentioned industrials anyone -- -- focus on that just from moment Tara -- that your every year with the industrials up.

It was my thinking that this will be a stronger sector in 2013.

Because the rebound we're seeing in particular.

Overseas but but you're not -- why.

Well you know certainly that the industrial sectors the weakest sector with a decline of 5% expected.

One -- -- joining keep Basil what do companies in this sector say about emerging markets going forward.

Are they seeing improvement or are we seeing things continue -- -- be really key to watch in the industrial sector and really for all the companies in the index during this earnings season.

John -- said he really did call the third quarter numbers there there were on the -- your estimates work.

What is the one thing that you said that -- -- one company the once sector we've got to watch as -- kick off earning season.

Right I would go back to the financial sector again is -- expected to be the largest contributor to growth this quarter.

-- we have seen the numbers come down a little bit of the last few days due to the settlement announced with back with with Bank of America and with Fannie and Freddie Mac.

That's really the sector driving growth -- that's one you wanna watch this quarter.

Again a couple of general themes on the global side watch for companies talking about conditions in China and other emerging markets in in Europe and on the domestic side.

Watch -- they're saying about the impact of -- sandy.

And the impact of fiscal.

Policy other retailers are gonna have -- some variation -- insurers say about hurricanes -- more jump -- thank you very much in fact that we're gonna be watching estimates thanks John.

Right thank you.

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