Positive trade data out of China and the U.S. should perk up
the market's spirits a bit, but will likely prove not enough to
fully reverse Thursday's losses. The market is in a somewhat of a
news valley at present, with not much on the earnings and
economic docket to give it a clear directional nudge. The trend
will likely continue next week as well, though the January Retail
Sales data coming next week (Wednesday) will give us a good sense
of the impact of payroll tax hikes on consumer spending.
The U.S. trade deficit narrowed more than expected in
December, reversing the surge from the month before, and
essentially confirming that the fourth quarter GDP growth number
will be revised upwards.
The first read on fourth quarter GDP that came out last week
and showed -0.1% decline reflected the Commerce Department's
estimate of December trade deficit. This morning's trade deficit
number is significantly lower than what was imbedded in
Commerce's advance GDP number. Everything else constant, this
narrower than expected deficit number by itself would amount to
raising the Q4 GDP growth rate from +0.5% to +0.7%. Bottom line,
the Q4 GDP number is actually is actually in the positive
territory. This may not be a surprise for the market anyway as
investors had largely discounted the negative GDP print on the
day that it came out.
The other trade data today came from China, further confirming
the positive momentum that we have been seeing lately in that
country's economic numbers. The consensus view on China is that
the country's economy has turned around, with the long-feared
'hard landing' no longer an expected outcome. The comment from
) CEO earlier this week that China's actual economic growth in
2012 was half of the official GDP numbers would indicate that the
'hard-landing' may have come and gone already.
On the earnings front, we got better than expected results
) this morning and
) after the close on Thursday. The overall scorecard for the Q4
earnings season as of this morning shows that we have seen
results from 342 S&P 500 companies (77.1% of the index's
total market cap).
Total earnings for these 342 companies are up +2.8%, with 67%
of the companies beating earnings expectations. On the revenue
side, 63.5% of the companies have come ahead of expectations and
total revenues are up +0.9%. This is a better performance
relative to both pre-season expectations and what these same
companies reported in the third quarter. We have started seeing
estimates for the coming quarters come down in recent weeks. But
they still represent a material ramp up from what we have been
are scheduled for release today at 10:00 AM EST and are expected
to increase by 0.4% after increasing by 0.6% in November.
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