Monday, January 21, 2013
With the markets closed today for Martin Luther King Jr. Day, the
earnings season takes the day off as the reporting flood gates
open from Tuesday onwards. It has been a relatively uneventful
earnings season thus far, but this week promises to give us a
good taste of what's really in store as we will see more earnings
reports this holiday shortened week than the last couple of weeks
combined. The focus will be on the Technology sector with
Apple
(
AAPL
) on Wednesday,
IBM
(
IBM
) and
Google (
GOOG
)
on Tuesday and
Microsoft
(
MSFT
) coming out with fourth quarter results on Thursday. Beyond
Technology, we will hear from top players in a variety of
industries from
DuPont
(
DD
) to
McDonald's
(
MCD
) and
Starbucks
(SBUX).
Friday's announcement about an apparent decoupling between the
debt ceiling and the pending budget issues is a major positive
for the market, which should help sustain the recent momentum in
stocks. The market wasn't showing any outward signs of fear to
begin with, but this announcement has really pushed the CBOE's
VIX Index, generally considered a proxy for fear or anxiety in
the market, to levels not seen since the first half of 2007. You
would be perfectly justified in wondering if investors are being
a bit complacent here as there is no shortage of clouds on the
horizon. It may not be the lull before the storm, but the level
of calm in the market is nevertheless a bit unnerving.
The relatively uneventful fourth quarter reporting season thus
far may also have played a role in contributing to market calm.
Results from the 67 S&P 500 companies that came out with
fourth quarter earnings as of Friday January 18th were a tad bit
better than what that same group reported in the third quarter.
But that may not be saying much as the third quarter was the
weakest earnings season on record since the start of the earnings
cycle in 2009. Overall, the corporate earnings picture remains
quite weak, but you would be hard pressed to see that in current
earnings expectations. Estimates for 2013 have started coming
down a bit lately, but they still represent a significant ramp up
from the low single-digits growth pace of 2012. It will be
interesting to see how the stock market behaves in the coming
weeks and months as those expectations start coming down.
Today also marks the inauguration of President Obama's second
term. Americans may take presidential inaugurations for granted,
by for someone like me who was born and raised in a foreign
country, this is always an awe-inspiring moment. I am not talking
about the pageantry of the event and the lofty words of the
inaugural speech, but the spectacle of the peaceful transfer of
power that the event symbolizes. Many nations rely on a monarch
to ensure continuity and peaceful transfer of power, but this
country has been able to ensure that in a republican framework.
No country does the peaceful transfer of power better than
America. Irrespective of your political leanings, don't lose
sight of this fact as you follow today's inaugration.
Sheraz Mian
Director of Research
APPLE INC (AAPL): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis
Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis
Report
INTL BUS MACH (IBM): Free Stock Analysis
Report
MCDONALDS CORP (MCD): Free Stock Analysis
Report
MICROSOFT CORP (MSFT): Free Stock Analysis
Report
STARBUCKS CORP (SBUX): Free Stock Analysis
Report
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