Will 2016 finally be the year European earnings return?

The past four years has seen analysts forecasting double digit earnings growth for Europe then gradually revising these expectations to zero (or negative) each year.

Despite the launch of QE, a similar pattern played out in 2015 with the main drag on earnings coming from commodity-exposed and cyclical stocks. Europe's stagnation is completely understandable in the context of hard money (no QE) and austerity. Both these factors have reversed at a time when analyst expectations for mid-single digit earnings growth in 2016 are lower than they have been since 2008. An improving medium-term trend is already in place. While it is expected to continue to improve, the lessons of the past few years have been to buy good companies that can perform reasonabl...