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
) on Wednesday,
on Tuesday and
) coming out with fourth quarter results on Thursday. Beyond
Technology, we will hear from top players in a variety of
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 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 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 inauguration.
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