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

Very mixed still best describes Q4 earnings reports and measured against what’s been seen over the past few years where company’s beat estimates 70-75% of the time, it’s downright disappointing as only about half are exceeding expectations and many that are beating are missing revenue estimates. With this said, I think the game of ‘Beat the Numbers’ is just expectations management and thus nonsense. Ahead of the FOMC meeting Tuesday, today’s WSJ says the possibility of QE3 is in a wait and see mode dependent on the data. Reading past whether QE3 happens or not, the Fed mentality of wanting to print money in the belief that it’s the cure to our economic ills has not been tempered at all by their experiences with it over the past few years. Econometric models and not the marketplace still rule their day. In Europe, a Greek newspaper is saying that an agreement has been reached between the Greek government and its creditors and the Greek 1 yr yield is falling 40 bps after rising 39 bps yesterday. In Asia, China’s HSBC flash manufacturing PMI was little changed in Jan at 48.8 vs 48.7 in Dec. It is though below 50 for 6 out of the past 7 months and the prospect for more easing had the Shanghai index rallying to the best level in 6 weeks ahead of the one week Chinese holiday.