The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

Earnings season continues to be on a solid track with upside surprises from IBM, GOOG, BAC, GE, and MAT. However, if we refer to Q2 reports as Revenue season in terms of gauging economic activity, the quarter so far from companies that have reported is more of a mixed bag. The discrepancy is similar to what we saw in Q with a majority of companies beating EPS estimates but missing revenue estimates. It’s a tribute to corporate America’s ability to keep a lid on costs and improve margins but also highlights the tough economic environment. Most importantly, guidance on the economic outlook remains cautiously optimistic. June Housing Starts are expected to total 530k, little changed with May but still above the record low of 454k in April. In terms of a market that still has too much inventory, let’s root for less starts and permits. The sustainability of any US recovery still comes down to home prices and the consumer.