As the third quarter earnings season kicks off, Interactive Brokers chief strategist Steve Sosnick joins Morning Brief to discuss his expectations for growth.

Sosnick believes that this earnings season will be "all about guidance." He explains, "It used to always be that if a stock beat its DPS (dividends per share) estimate, then that was a good reason to rally. That is no longer a sufficient condition — it's a necessary condition. You're not going to rally if you don't beat your published EPS (earnings per share). But in an era where 75-80% of companies beat their EPS estimates, does it really matter so much as all the other stuff?"

Thus, guidance will be crucially important, as companies will give insight into whether or not the guidance priced into their stocks is "sufficient." While valuations have hit all-time highs, Sosnick draws an analogy to pole vaulting: "We keep raising the bar, which is fine as long as we keep clearing it. But if you raise the bar high enough, eventually, you won't clear it."

He continues, "And that's why I focus on the guidance aspect of it, because it's really about, is the economy going to be suitable for a wide range of companies to maximize their earnings in a way that investors are pricing in?" While the "Magnificent Seven" have been driving earnings growth this year, Sosnick will be watching closely to see if they can continue to deliver, and whether the rest of the S&P 500 (^GSPC) players will be able to do the same.

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

This post was written by Melanie Riehl