Friday's fears stretched into the start of trading this week for
the markets, and despite several small merger deals being
announced, investor sentiment remained quite bearish for much of
the day, despite ending off the lows of the session. The European
and Asian markets plummeted following further debt concerns early
this morning, so it comes as no surprise that the U.S. markets are
following suit.
We'll start off by looking at the few positives from the markets
today, and they were the positive reactions to earnings results fro
Halliburton (
HAL
), Hasbro (
HAS
), and Eaton Corp (
ETN
). McDonald's (
MCD
) didn't share in the earnings parade however as
the company missed their numbers
. Strong dollar concerns also weighed on the fast food giant.
Finally, Wall Street analyst downgrades pushed share prices of
Marriott International (
MAR
), Manpower (
MAN
), and Coach (
COH
) lower.
Fundamentals Matter - Most of the Time
As we sit here watching the markets getting hit today, the
cautious tone we've been picking up on from corporate America the
last couple of quarters is starting to be felt. If you've noticed,
we have been quite stringent with the number of stocks we are
currently recommending on our
Best Dividend Stocks List
.
It's difficult to be massively bullish after watching see the
markets rally on low volume, or when just one piece of economic
data happens to be much better than analysts had been forecasting,
only to see the following month's data reverse course back to the
negative side. Then the minute you think the market is set to wash
out, and perhaps put in a sell-off that can truly sort things out,
you get breaking news of bailout talks or something else of the
sort. We're certainly not rooting for a stock market crash, but
sometimes bad news really is bad news and thus needs to be
reflected in actual stock prices. I personally have never seen a
market like this before, where specific companies' earnings results
and commentary don't correlate with other names int he same
industry. Such is the daily battle we fight in our painstaking
daily research.
The business media loves the dramatic side of covering the
day-to-day movements, but they also know it is much better for
business when the focus is painted more positively than negatively.
It all comes down to real dollars and what is actually happening in
the real-world economy. Real estate prices have held up well in
select spots, but for the most part prices remain capped.
Comparable sales data continues to hurt sellers and buyers who are
hoping to take advantage of low interest rates. With no idea of how
much real inventory exists in the markets (many point to a "shadow
inventory" of millions of foreclosures that banks have held back on
adding to an already crowded real estate market), any talk of great
investment returns in real estate is essentially confined to the
few geographic areas which have seen job growth.
Of course, our focus is the stock markets, but you can not
ignore the potential overhang of how economic data eventually
creeps into corporate America's profit picture. Being super-bearish
is not a great strategy either, as we have seen plenty of Federal
Reserve bulletins on doing whatever it takes to lift economic
sentiment. Not to mention short sale bans, which Spain just
announced this morning.
Short-term, these governmental measures can help keep the
proverbial balls floating in the air. But fundamentally, the
long-term fix is still not clear. Creating jobs is of utmost
importance, and few have confidence that world governments can put
the right programs in place to make that happen. It really comes
down to corporate America and small businesses to get that
employment ball rolling.
In the meantime, we perform our daily routines in evaluating the
latest earnings reports. More importantly, we're working on
crafting the true picture of what the next 3, 6, or 12 months will
look like. Will we ever get true "coast is clear" data points in
our investing lifetimes? Probably not, but that doesn't mean
opportunities aren't around the corner. That's why it's important
to stay in the game, consistently putting your money work for you.
Eventually, smart money will be in the perfect place to take
advantage of some great investment ideas.
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I hope everyone had a chance to check out our
Dividend.com Premium
members-only weekend articles , including new features that
highlight some of the biggest winners and losers from the week that
was, such as analyst upgrades/downgrades and earnings/story stocks.
These articles are a great way to catch up on the week that was in
the markets. We also have a rundown of how various Dividend ETFs
performed on the week.
Thanks for reading everybody. I'll see you tomorrow!
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
our ratings system here
.