Strategic Earnings Misses Not Showing Collateral Damage

Author Larry Berman

Posted: 19 Apr 2012 re-posted from etfcm

The important thing to note thus far in earnings season is that strategic misses by companies are not showing collateral damage across the sector and the market. The market seems like it wants to go higher, but stock by stock, we are seeing broader based weakness develop. The next top could take several weeks to months to develop, so much depends on the G20/IMF and the strings the ECB can pull to pacify the equity markets (Geithner seems to be holding back on the IMF support, we don’t know why, he knows they just have to keep printing in the short run).

Earnings are decent and the outlooks, thus far, are not terrible, though somewhat cautious. If the ECB can throw a few hundred billion in implicit buying behind Spanish, Italian, and Portuguese debt, we can stumble through the next few months, but in absence of a real solution, we are likely in for a 10-20% global equity market setback…once again. A shift into SPLV from SPY should help mitigate the downside (beta) in the coming months.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: