What might be in store for the first quarter corporate earnings? For sure, many (perhaps more than 50%) will beat. More important, revenue picture should continue to improve, along with profitability. But most important of all is the outlook. Do companies feel more optimistic about the business, and they will thus invest more and create more jobs?
We'll be reading and watching these outlooks.
Perusing through this weekend's Barron's. Surprised to find something missing: Where is the deeply sarcastic perma-bear Alan Adelson? Has the market advance towards 11000 finally convinced him? Or is he taking a nap? Anyway, it's hard to continue to press for a pessimistic view in front of all the improving economic data and more importantly the markets.
The cautiously optimistic Michael Santoli is alive and well with his continuing caution for a potential correction. This time, we obviously agree. We think Q1 could have some surprises. The generally optimistic mood could have set it up for "buy on rumor, sell on news" kind of trade. But if the fundamental pictures are sound, we should see opportunities in post-earning blues. This is our thinking for raising cash last week.
Santoli mentions China being a factor. We do see RMB rising within a bigger band. The move won't be large. China needs to release some inflationary pressure that has been building up. And to transform itself into more consumption oriented, China should empower the consumers a bit. On this front, the Obama administration seems to be handling it well by pursuing an engagement policy, despite all the protectionistic noise.
If RMB rises substantially over the course of 2010, say another 5-10%, the increased raw material purchasing power should help crude, copper, steel, and other raw material producers. We want to be overweight in these areas.
See Big Picture for an interesting discussion on market sentiment.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment