Third quarter earnings season kicks into gear today with several of the large money center banks reporting quarterly earnings. Q3/20 EPS are expected to be down 20.7%, driven by the economically sensitive sectors (Figure 1), but are likely going to be “less bad” than the Q2/20 drop of 30.6% and should represent the beginning of the COVID-19 pandemic recovery (Figure 2). We believe this EPS recovery continues to be driven by historic excess liquidity coupled with further signs of a synchronized global recovery in the updated OECD data.

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