There's truly nothing like drawing the short straw -- charged
with writing Ahead of Wall Street with nearly all of Q2 earnings
season in the rear view and Q3 still six weeks away, low volume
as much of the civilized world remains on vacation, and somehow
trying to figure out exactly why the S&P 500 has pulled back
to 1650, and where it's likely to go from here. And it's not even
Shark Week anymore!
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It's enough to make one consider discussing the next Fed
chairperson or -- God forbid -- the situation in Egypt!
Thank goodness for the retailers -- the last major sector to
report this earnings season. After the bell today we'll hear from
), tomorrow is
). But if this morning's
) miss is any indication, don't expect Retail to rescue the
remainder of Q2 earnings season.
In fact, aside from the occasional anomaly like
), the main successes of this earnings season all occurred on the
front end, when the Financials reported. Total earnings growth is
actually down 3% -- weaker than Q1 -- when you subtract the
So what we've been seeing is what Sheraz has predicted: that
companies' guidance for Q3 and Q4 are coming down. But a glance
at the charts from his
on Friday shows that projected earnings growth for Q4 is still
very high; even subtracting the Financials, we're still
"expecting" 8.4% growth for that period. Needless to say, based
on our most recent quarterly results, 8.4% looks like
pie-in-the-sky at this point.
That said, by nearly all accounts we've reached the nadir of
economic growth that had been predicted earlier this year with
hurdles like the Sequester and payroll tax increase. Add to this
the expected QE Tapering and it should baffle nobody that the
overall market has been taking a breather lately.
Plus, that situation in Egypt is tragic and may yet have
consequences for the global market; we've already seen oil prices
rise as a result. See there? I was forced to discuss it