Chart 33: Correlation of sector EPS to global GDP since 2010 Chart 34: Trailing vs forward EPS CAGR - ranked by difference BANKS Basic Resources BASIC RESOURCE Oil & Gas REALSTATE Telecom CHEMICALS Construction & Materials RETAIL Retail TECHNOLOGY Auto & Parts INDS GDS & SVS Stoxx 600 HEALTH CARE Banks PERS & H/H GDS Media =m Syr TELECOM Utilities Trailing FOOD & BEV Industrial Goods & Sevices CAGR OIL & GAS HealthCare m3yr Fwd TRAVEL & LEIS Chemicals CAGR INSURANCE Real estate MEDIA Food & Bev Technology AUTO & PARTS Personal & Household goods FINANCIAL SVS (neers GON MAL Financial Services UTILITIES Travel & Leisure -20% 0% 20% 40% 60% 80% 100% 30 20 40 0 40 20 Source: BofA Merrill Lynch Global Research, Datastream, IBES Source: BofA Merrill Lynch Global Research, Datastream, IBES
Earnings revisions trends. Basic Resources show strongest revisions trends and revisions are still improving relative to trend, in light of the strong upside recently for many metals prices. Autos revisions are next strongest and also show some positive momentum. More broadly most sectors are not showing an improvement in the trend on earnings revisions. Revisions are weakest in Tech having deteriorated more than other sectors over the past six weeks. The improvement in Financials revisions continues and Banks and Financial Services are now in positive territory.
Chart 35: 3-month average EPS revisions ratios (ERR) by sector Chart 36: Revisions improving in most sectors (ERR 6wk avg vs 3m avg) 12% 4%
= Momentum: last 6 weeks vs 3-month
10% 3% ne aa & Trend (3m avg) EPS revisions average EPS revision ratio (%)
8% 2% 6% , 1% 4% ; : 0% 2% -1% 0% 9 -2% -2% “AY -3% ‘0 6% 4% SLESSLSSLZLLELLEEEYB SLLLESLLLSEESLLESSEB SSSZI eS sssoesss sees a PSSESSEORISSSSESSSSS exsePseSeESs>aox mstrer-=zg Sev SES Laoef wo em Sc Prtsg se p22 38 Sgptt SaaS 2 SB BeBe Fe = ® 8 =>fo En Soe ®9eEecVnE o> 85 oS ri £ 6a x= 8 er 8 iL - Ee 2 fE 2 oO oO Source: BofA Merrill Lynch Global Research, Datastream, IBES Source: BofA Merrill Lynch Global Research, Datastream, IBES yl y' , Bankot America 14 European Equity Strate 01 December 2016 A P quity By | Merrill Lynch
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