With third quarter earnings season set to kick off this week, Willem Sels, HSBC global CIO of global private banking and wealth, joins Catalysts to break down what investors should be watching.

"The earnings season has actually a relatively low bar in the third quarter. Remember, in the second quarter, the bar was high and companies still beat it. In the third quarter, for some reason, the analysts have become more negative, even though the companies guided positively and economic data, as you saw, for example, in the payroll data and wages and the unemployment data, the economy is actually doing quite well. So I do think a lot of companies are going to beat those relatively conservative earnings expectations," Sels tells Yahoo Finance.

While he expects earnings to be resilient, there will be some pressure on P/E ratios (price-to-earnings ratio). He notes that the bond market has priced perhaps more rate cuts than the Federal Reserve will actually initiate, which could put some pressure on the expansion of P/E.

"The good news is that now the market is looking for a no lading or a soft landing scenario, soft landing even better to some extent than no landing, because indeed, if you were to have a no landing scenario, then the market could start to price out, remove some of those rate cuts and that could lead to some multiple contraction," he explains.

Sles adds that the recession risk at this point is "relatively low."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl