Morgan Stanley: Q4 Earnings Are Coming In Line With Expectations

A host of companies have disappointed investors by declaring worse-than-expected December quarter results, including big names like Microsoft Corporation (NASDAQ: MSFT), Caterpillar Inc. (NYSE: CAT) and Alibaba Group Holding Ltd (NYSE: BABA).

However, Adam Parker, chief U.S. equity strategist at Morgan Stanley, feels the earnings have come in-line with what he expected. Parker was on CNBC to discuss the quarterly earnings reported by companies and the stocks to avoid.

Are You Disappointed By The Sluggish Earnings Reported So Far?

"Actually no, the numbers are coming in about what we expected. They are obviously above the bottom of consensus expectations heading in. I think the good news is that you had nine weeks ago a bottom up numbers that looked like there will be 14 percent earnings growth this year, they have been called all the way down to 6 percent growth and I think 6 is about right."

He continued, "What's interesting is all 10 sectors in the market have seen downward revisions and to me there will be certainly places in the consumer and other areas with lower input cost that will see upside later in the year. So, I kind of like 6 percent earnings as a base case for this year and I think the numbers are coming in right about with what I expected."

Avoiding Currency Dependent Stocks

"I think everyone knows that currency is a problem," Parker said. "So, we are not recommending the areas that are hard to sell. We don’t like staples, we don't like machinery, we don't like chemicals. We are avoiding select tech and healthcare, we are not recommending any of those areas because you want to play that relative revisions games and I think that the currency is going to hurt."