Europe's Profit Warning

So that global market selloff may have eased -- a little. It would still be foolish to ignore the implicit warning about the revving up of risk appetite since Britain's historic vote to quit the EU. In Europe, in particular, there's a real danger of over-optimism about corporate earnings.

European markets over the summer enjoyed a more pronounced rebound than in the U.S. or globally. Blue chip equities in the euro zone rose about 5.5 percent over July and August, versus a 4 percent gain for the MSCI World index and a 3 percent rise on the S&P 500. Investors were betting that stocks were in a "win-win" situation: central banks would keep the money taps on, while macroeconomic data pointed to a recovery in corporate profits. The European cyclical sectors of cars and banks got a big boost, up 14 and 10 percent respectively in the same period.