) -- It's a been a topsy-turvy week on Wall Street (mostly turvy), and this insight from David Bianco, chief U.S. equity strategist at Deutsche Bank, seems very appropriate.

"Investor excitement for QEternity overlooked the weakness that warranted it," he said in commentary on Monday. "Third quarter global deceleration has brought the worst earnings season since the recession. Rather than the accustomed to 2-4% beats and 8%+ y/y EPS growth of the past several quarters, it appears that the steadily lowered estimates will be beatenby only 1% and that y/y EPS growth will be flat for the S&P 500 and down 3% fornon-financials."

That may be the essence of what transpiring this month. Stocks ran up from early in the summer in anticipation that the

Federal Reserve

would come across with more quantitative easing, but the flip side of that is the fact that the economy (arguably) needs more quantitative easing isn't good for stocks.

As Bianco points out, this earnings season is making that abundantly clear.

"Although most companies are meeting and slightly beating, there have been significant misses at large multinational companies that are sensitive to global manufacturing, investment and trade," he wrote.

Bianco remains bullish though, keeping his 12-month target for the S&P 500 at 1500 "until more clarity emerges" and "flipping" the firm's tactical call about what direction the next 5%-plus in the index will be to the upside.

Part of his motivation for that flip is a feeling that the presidential election is now a toss-up with Republican presidential candidate Mitt Romney having a 50% chance to emerge victorious. Bianco also thinks the road only gets more rocky from here.

"Fiscal policy uncertainty is likely to surge in the coming months," the firm said. "The fiscal cliff will be averted, but there will be fierce fights on the mix of spending cuts vs. tax hikes that spill into next year. How will the rating agencies and markets react?"

As for Friday's scheduled news,


(MRK) - Get Merck & Co., Inc. (MRK) Report

is slated to report its third-quarter results before the open and the average estimate of analysts polled by

Thomson Reuters

is for earnings of 92 cents a share on revenue of $11.57 billion in the September-ended period.

The stock is one of the best performers in the Dow this year, rising nearly 23%, though it's pulled back a bit in the last week since hitting a 52-week high of $48 on Oct. 18. Merck has an eight-quarter streak of beating Wall Street's profit expectations on the line.

The sell side is only mildly bullish on the stock with 11 of the 21 analysts covering Merck at either strong buy (5) or buy (6) and the remainder at hold. The 12-month median price target is $48 vs. Thursday's close at $46.30, but the valuation isn't all that stretched with shares trading at a forward price-to-earnings multiple of 12.4X vs. 13.8X for the

S&P 500


The problem for Merck remains stagnation on the top line as an in-line revenue performance this quarter would represent declines from its total of $12.31 billion in the second quarter and $12.02 billion in the same period a year earlier.

Other early reporters include

American Axle & Manufacturing

(AXL) - Get American Axle & Manufacturing Holdings, Inc. Report


Arch Coal

(ACI) - Get Albertsons Cos. Inc. Report


Comcast Corp.

(CMCSA) - Get Comcast Corporation Class A Report


Coventry Health Care



Entrecom Communications

(ETM) - Get Entercom Communications Corp. Class A Report


Goodyear Tire

(GT) - Get Goodyear Tire & Rubber Company Report


Graham Corp.

(GHM) - Get Graham Corporation Report



(IMGN) - Get ImmunoGen, Inc. Report


Interpublic Group

(IPG) - Get Interpublic Group of Companies, Inc. (IPG) Report






(KKR) - Get KKR & Co. Inc. Class A Report


Lear Corp.

(LEA) - Get Lear Corporation Report


Legg Mason

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, and


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The big piece of economic data due Friday morning is the advance estimate of gross domestic product for the third quarter, slated for release at 8:30 a.m. ET. The consensus estimate is for growth of 1.9%, up from 1.3% in the second quarter, according to

, whose own projection is a less optimistic 0.8%.

Paul Ashworth, chief North American economist at

Capital Economics

, is expecting annualized growth to remain flat with the 1.3% pace seen in the second quarter.

"Consumption growth appears to have accelerated and residential investment appears to have been strong. Judging by the rebound in State and local government employment, the public sector may also have contributed positively to growth. However, it appears that business investment actually contracted slightly," he said. "Net trade was probably a small drag on GDP growth too. Finally, inventories were probably a big drag."

Ashworth said he believes the risks to the firm's forecast are on the downside and cited Thursday's durable goods data as further evidence of that.

"Admittedly, overall durable goods orders rebounded 9.9% last month," he said. "However, non-defense capital goods orders (ex. aircraft) were unchanged and August's gain was revised lower. Worse still, actual shipments in the same category shrank in September and the decline in August was bigger than originally reported."

The only other release is the final University of Michigan consumer sentiment reading, which is due at 9:55 a.m. ET. Economists are expecting the number to stand pat at 83.1.

And finally,


(AAPL) - Get Apple Inc. (AAPL) Report

will be a huge topic tomorrow after the company's

mixed fiscal fourth-quarter report


The stock was looking incrementally higher as the extended session drew to a close, so this may be a case of the bad news not being all that bad (or priced in). A virtual avalanche of sell-side research will surely offer a range of opinions.


(AMZN) - Get, Inc. Report


another one to watch

as the company's operating margins dipped into negative territory last quarter and founder and CEO Jeff Bezos seems almost euphoric about it.

"Our approach is to work hard to charge less. Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point," said Bezos in the press release announcing the company's wider than anticipated third-quarter loss. The stock was off nearly 1% after the close.


Written by Michael Baron in New York.

>To contact the writer of this article, click here:

Michael Baron


Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.