It seems that all of the bear holdouts are capitulating, beginning first with Richard Russell. I listened to R. McHugh (on Saturday's FSO broadcast) and whose "jaws of death" chart I still have. (We have since cleared the highs then predicted prior to the potential great plunge; he stated on Saturday that he expected the market to reach higher highs). One of my favorite bloggers, Tim Knight, is not registering a blip on the market fun-o-meter.
I have no idea what the market will do. I found it interesting that Bob Pisani seemed to be priming the earnings pump with the "lowered expectations" comment. I'm not sure how 4% earnings growth is terribly positive given the valuations as a whole. That's merely a CPI adjustment to your contracts rather than any true organic growth. Even if earnings growth comes in at 7%, that's still modest if you factor in inflation. I'm just not buying these "good news" stories.
AA's earnings were in, and the reaction was negative then neutral in AH. I don't follow the stock. They kick off earnings season, as I'm sure that you know. With the market at all time highs, I would surmise (not prognosticate) that the market will be a wee bit nervous. Personally, I'm watching the banks most particularly for revision to their loan loss reserves as well as writedowns.
I did note that Fitch is warning of downgrades to SLM's bonds given the amount of leverage required to do the proposed buyout. I have to wonder (1) at what point do the bond investors begin to turn up their noses; and (2) with lowered bond ratings that beget higher interest rates, what will that do to SLM's financial metrics. As risk gets repriced into the market, that repricing (if it operates the way I believe that it does) has the effect of reducing liquidity. Liquidity is what has fueled this market; reduced liquidity will wash it away.
4 comments:
I am anxious to see gross profit margins. All the ISM reports have shown high "prices paid" indices and I don't think they have been able to pass all those increases on. The record corporate profit margins have be go down sometime. It will be an interesting earnings month.
Best of luck with your dog.
-ww
WW--Thanks for your well wishes for Greta. Yes, I think that margins will suffer, though there are a few industries that price increases can be pushed through to the end user. And, all of the stuff that does not show up in core inflation does show up in profit margins.
Looks like BC's discussion thread is down/disabled with his move to Bahamas.
I miss the postings by the regulars.
Are you still holding your DXD?
jogyP
JogyP--DXD is history for me. I took profit and bought July 136 calls. I'm not sure if we bounce tomorrow. I have a feeling that the Asian markets are going to swoon on our market news today. But....I'm frequently wrong.
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