Ramblings of a Portfolio Manager-
The Quarter ends Tuesday and the unique part of this quarter, as opposed to any other in the past few years, is that the bad news always comes first. That usually leads to the market selling off ahead of good earnings. We haven’t gotten that. The question or big fear is what will the earnings be like and will companies meet or beat expectations. The economists have gotten the economic numbers all wrong: housings starts, unemployment and GDP were all better than expected. Will the same be true for the analysts on stock earnings estimates? Even if they haven’t lowered estimates enough will anyone care? Is the focus on the assumed company line of “no forecast”. Is anyone even looking at near term earnings? More likely everyone is focusing on the here after, out a year or more.
Normally in a recession we see a rise in alcohol consumption. This hasn’t happened and may portend a different recession/recovery cycle. Business left to its own devises would be headed down the road to recovery most likely by the end of the year and stocks would anticipate the recovery about now. The big question is what will Government do to lead us down the wrong path or how many road blocks will it place in our way.
Last week we started to see the early consumer cyclical and commodity stocks rally, a Treasury buy-back and a run in the housing stocks--the natural course of the beginnings of an economic rebound.
