The Financials Pit Review
For the week of October 12th, 2009
By PitGuru Frank LaMantia
S&P & Currencies
A new high was reached in the market and the S&P is trading in the 1070's with no visible resistance. Last week the S&P rose 4.5%, beating the best weekly rise since July3. Firms are still selling holdings to try to make up for losses or to show gains. This morning Blackstone announced that it was willing to sell 5 companies that it owns. Also, Goldman Sachs is catching flack for giving out bonuses. My opinion is that no one should count other people's money. Most of Main Street does get jumpy because of the astronomic pay these people receive. Let's not forget the risk they take, the hours they put in, and the amount of years these people give up on their lives due to stress. The bonuses they receive are off of profits - and they are typically profitable. One should be concerned about Citigroup and the fact that they have to pay their commodities manager more money in bonus than they pay the entire company. At least Goldman has a great stock which trades at 196 while Citigroup trades at 4.50. Earnings reports are still coming this week and should make it interesting for day trading. I am going to mention those that most will be keeping an eye on. Try to look at all of the earnings to have a clear sense of which sectors appear the strongest.
Monday we have Charles Schwab (SCHW) which is expected to deliver an EPS of 0.17. Tuesday, Johnson & Johnson (JNJ) is expecting 1.13. Also, Intel (INTC) expects .27. Wednesday, JP Morgan (JPM) expects 0.49 and has pretty much weathered the storm since the downturn in the market in 2008. As you remember, JPM absorbed Bear Sterns in a fire sale due to the government loving Jaime Diamond, CEO of JPM. I would have to say that Thursday could be a pretty exciting day considering that Advanced Micro Devices (AMD) expecting -.42, Citigroup (C) to expect -.21, Google (GOOG) 5.38, Goldman Sachs (GS) 4.24, and Nokia (NOK) 0.18 reporting earnings. Friday, Halliburton (HAL) expects .026, General Electric (GE) .20, and Mattel (MAT) .63. Energy and retail sales numbers could be the trigger that lifts the market to fresh highs.1
Economic data and earnings are very important this week so be attentive to every detail. Oct 14th, retail sales are forecasted to be down -2.7%. If the sales number actually beats expectations and earnings are positive buyers could step in lifting the market. Oct 15th, CPI and Initial jobless claims will be announced. CPI is expected to be 0.2% and Core CPI to be 0.1%. The market also expects initial jobless claims to be 525k. Everyone is waiting for positive data for retail sales, job reports, and earnings. Can they hit the trifecta and have all of those reports be positive? I don't think so and I am very bearish on job reports and retail sales.1
In currencies, the Euro has reached its year high of 1.4768 on improving data and a weakened US dollar. I am not sure if this can continue. Pretty soon the US may be bought out by every major European bank or hedge fund. The dollar falling is not a good sign even though the stock market is rising. The US doesn’t feel like the major financial super power it used to be.
1 http://biz.yahoo.com/c/e.html
2 http://www.cnbc.com/
3 http://www.ft.com/cms/s/0/83dc1b6a-b511-11de-8b17-00144feab49a.html?nclick_check=1
***chart courtesy Gecko Software’s Track n’ Trade Pro
Past performance is not necessarily indicative of future results.
