GZ,
>>>>>>>>> October 14, 1998 trading-ideas.com
According to First Call, of the 93 companies that have reported earnings in S&P 500 index, the weighted EPS came in 0.9% below consensus estimates. More importantly, earnings from the same companies are down 13.7% year-over-year - a negative. While the sample is fairly small,actual earnings have been weaker than expected and analysts expect the overall earnings growth to be negative for Q398. Positive earnings have come from automotive, telecom equipment; software and computer makers while negative sectors include money center banks, brokerage, beverage, food retail, natural gas and mining.
The Commerce Department reported today that retail sales rose 0.3 percent in the month of September, below analysts expectations of 0.5 percent. This was the first quarter that retail sales declined in more than a year, an indication that consumers have become defensive, which would lead to slow growth in coming months. Bond market reacted positively to the news, as the 30-year Treasury bond rose 1 17/32, or $15.31 per $1,000 bond, driving its yield down 10 basis points to 4.99 percent. Bond yields fell for the second day in a row, after pulling back sharply last week. Bond market continues to discount further rate cuts (50 basis points) before the end of the year.
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I understand that you feel that most of the negative news is incorporated into the market - Im just not so sure of that. I hear the arguement of the new paradigm, but I just cant close my eyes to the fact that the S&P P/E is still in the 22-24 range, which is still at historically high levels.
I also hear often from analysts that the earnings will be better than expected this quarter. I have to wait and see. The question that comes up all the time for me is - who do you believe. Frankly, I have a strong distrust for analysts, so I will just wait for most of the numbers to come out and see if all the negative news is really already incorporated into the market. Hey you may be right, I will wait and see.
seeya |
