Posts filed under “Earnings”
We are now entering one of those periods of time when a broad variety of market factors resolve themselves for better or worse. When this happens, markets can suddenly shift in either direction. We can see an acceleration to the upside, or a significant trend reversal.
What are the inputs of great import that might rush into play? Consider:
• Q4 Earnings reporting begin in earnest; Earnings have been at near record highs, and Q3 reports saw quite a bit of softening.
• Sandy Watch conference calls for the Hurricane Sandy excuse. In terms of forward guidance, see if the Uncertainty bugaboo gets trotted out more than usual;
• Uncertainty The wildly over-hyped Fiscal Cliff nonsense is behind us, only to be replaced with a just as over-hyped Debt Ceiling negotiations.
History teaches those who pay attention that there is always something coming, and Uncertainty is the normal state of affairs on this planet. Periods of Time where there is no Uncertainty can be described as “Epochs where we are lying to ourselves” and “bubbles.”
• Technicals are seemingly overbought — but then again they have been for some time now. Watch market breadth and new highs & lows for some more insight into market internals;
• Economic data, which has been mixed, seems to be firming somewhat. Employment is gianing, inflation is modest, and imports have ticked up. The consumer is still deleveraging, but is unafraid to spend. Finance driven purchases — think Auto sales and Housing — remains a bright spot.
• Europe, which has been a clusterf#$%, seems to be resolving short term in a positive manner. I am not yet convinced that they have put into effect any long term cures, but austerity fatigue and a very active Central Bank can produce positive short term effects.
• Japan may be experiencing a similar improvement.
• Fund flows are a double edged sword. On the one hand, they are not the most standardized data set, and short term aberrations could easily lead to the wrong conclusion.
• Sentiment: I am more concerned that following a 4 year 108% bull cycle in equities, and a year of double digit gains, the public suddenly rediscovers stocks. Based upon the fund flows above (which may or may not be accurate) this is a potential crowded trade issue.
As you can see, there are lots of unresolved issues, but we know the likely distribution of outcomes. This is called Risk, not Uncertainty.
More later this morning . . .
Source: Adam Parker, Morgan Stanley Today’s absurd datapoint comes from Slate’s Moneybox: 88% of the S&P500 earnings growth for 2012 came from just 10 firms. Just four companies—Apple, AIG, Goldman Sachs, and Bank of America—together provided a majority of overall earnings growth among large-cap companies. Source: Four Companies That Together Provided Most of…Read More
click for larger graphic I took some Apple (AAPL) off the table in late October — it was due to the combination of macro concerns, a wildly over-owned stock, and the technical weakness behind the fall from $705 to $620. But we still have a position, and after the sale, it was painful to…Read More
So the non stop Fiscal Cliff paranoia continues unabated. Apparently, it is the ONLY THING that matters to the markets. Every twist and turn in the negotiations is crucial to the future of the Republic. I don’t buy it. First off, as David Kotok explained, the fiscal cliff is more of a slippery slope than…Read More
Source: Bianco Research With most of Q3 earnings now reported, we can take a quick look at the numbers, and they are none too pretty. Before you roll your focus to Q4 earnings, lets pull a few numbers from Nasdaq: -460 of S&P500 companies reporting, total earnings are down 2.2% (vs same Q3 2011);…Read More
click for larger table Source: Standard and Poors Standard & Poor (whom I frequently criticize as awful when it comes to ratings) does excellent work when it comes to assembling data on earnings for their flagship index, the S&P500. Their S&P 500 earnings and estimate report is quite excellent. You can download a spreadsheet…Read More
S&P 500 Index with Share Weighted Earnings Average YoY Gain/Loss From Fusion’s Kevin Lane: “The lower chart panel at bottom tracks the share weighted average earnings (gain or loss) for each quarter on a YoY basis for S&P 500 Index companies. For instance, @ present, with a bit more the 1⁄2 the companies reporting,…Read More
All this week, I have been discussing why I thought we may be coming to an end of the cyclical bull market that began in March 2009: Listen to Ritholtz Sees “Major Cyclical Correction” from Tuesday morning, and watch this and this from Thursday. I have cut back on some major holdings, and raised our cash…Read More