This week will be an important week for stocks. Not only because of the debt ceiling, but also because the earnings season will start again. What is to be expected?

The next few days will be a great indication for the rest of 2013. The debt ceiling is number 1: the market assumes that there will be an agreement before October 17th, and so do we. A nasty turn of events is something you always have to be prepared for, but the signs from Washington seem to indicate that there is enough sense of reality and responsibility.

Earnings
Political turmoil aside, the focus of investors will be mainly the company results and earnings reports. There is a fear among investors that the fast climb of interest rates in the US this summer has had a negative effect on earnings. Byron Wien, vice chairman of Blackstone, already mentioned this in the middle of August.

Wien is supported in his view by David Bianco, stock strategist for Deutsche Bank. Bianco believes as well that the corporate world will report lower margins because of the higher interest rates. He also warns for the mindset of investors because of the political mess in Washington. Disappointing company results can then be the last drop for investors, who could pull out for now.

Our tip: don’t pay too much attention to the percentages of companies that have beaten estimates. That’s a fixed process and doesn’t say a lot about what is going to happen. We’ll cover that more in depth at another time.

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More Bulls than Bears

Even after a weekend in which talks broke down regarding the DC deal that the market thought it might get at the end of last week, there were more bulls than bears in our weekly Bespoke Market Poll by a margin of 56% to 44%.  This was similar to the surprising reading we saw in AAII bullish sentiment last week.