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Earnings on Tap for Thursday, Fingers Crossed

by: Trader Mark October 15, 2008 | about stocks: AMR / BBT / BTU / C / COF / DAL / ESLR / GILD / GOOG / HOG / ISRG / MER / NOK / NUE / PNC / SHW / SPWRA / UTX / WFC / ZION    
Trader Mark

Trader Mark

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A very busy day tomorrow.... not sure if it matters at this moment, but we'll keep reading about the fundamentals, hoping that by 2010 it will matter again. For the short run, remember it is not the news but the reaction to the news that matters - when stocks begin to rally on bad news we can believe that light at the end of the tunnel is not a train. If any of us still have limbs...

Our two larger regional banks both report tomorrow - BB&T (BBT) and PNC Financial (PNC); so far both have mostly held up well although the latter has been hit the past few days. We'll look for the same metrics as usual, bad loan allowance and how badly current loans are degrading. I'm hoping these are my Wells Fargos (WFC).

Unfortunately Capital One Financial (COF) [credit cards] and Citigroup (C) [just a big mess but a government favorite] also report. Merrill Lynch (MER) too - although it's going to become part of Bank of America (BAC). Zions Bancorp (ZION) is another regional bank which actually has done very well of late but I decided against due to quite a bit of CA exposure- but the market seems to like it lately.

In airlines, we have Continental (CAL) and Southwest Airlines (LUV) - you have to combat lower oil prices (pro) with the inability of anyone to afford to fly anymore (con) for these... if airlines are your game Delta (DAL) and AMR (AMR) reported today.

In solar, we have two US companies on opposite sides of the scale - never can find a way to make a profit Evergreen Solar (ESLR), and large scale Suntech Power (SPWRA) - this sector is simply hated right now.

One of the few biotechs we watch Gilead Sciences (GILD) will report - no safe haven there as hedge funds own(ed) a ton of this one.

In tech, Google (GOOG) reports - at their roots they are an advertising firm and the two biggest advertisers have been financial and automotive. I just keep waiting for the floor to drop here, but maybe it's been a slow-motion destruction - other than one post-earnings super rally this stock has been bad for a long time. IBM (IBM) already pre-announced so we know their story. Then there is Nokia (NOK) - my gosh I cannot even look at that chart; this was one of the biggest money makers for investors for many years; a safe, best of breed company. Nothing is safe anymore.

In consumer land, one of my favorite shorts noted last year is Harley Davidson (HOG) - the perfect big ticket item bought  through the house ATM that is now simply an unaffordable luxury for many. Before this recent leg down, the "housing related" stocks were rallying on the "imminent recovery" in housing - Sherwin Williams (SHW) was one of those; I'll be interested in what they have to say about how "imminent" things are.

On the healthcare side is retail favorite Intuitive Surgical (ISRG) - there have been rumors the past few quarters that hospitals might cut back on new purchases of the high priced machines due to lack of credit, so this has been hanging over the stock for a long time.

In commodity/global growth land we have steel maker Nucor (NUE) and coal giant Peabody Energy (BTU) - I don't think it really matters what they say anymore; hedge funds seem to have unlimited supply of these stocks to sell off.

In the large conglomerate land, we always like to take a peek at a United Technologies (UTX) which is basically General Electric (GE) without the TV station or financial arm.

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This article has 11 comments:

  •  
    Oct 15 06:35 PM
    Hi Mark, I always read your posts and appreciate the views and news. I don't know if you noticed that you wrote SunTECH Power instead of SunPOWER. Thanks
    Reply
  •  
    Oct 16 03:06 AM
    Given the magnitude of the market decline,the earnings are irrelevant to the market direction.
    The market had discounted not only a severe recession(a doubtfull outcome within the context of the measures undertaken to address the debacle),but an economic Armageddon.
    What really matters is the market psychology continuosly driven by distortions.
    The 700 billion dollar "stability plan" is a 5 trillion dollar catalyst(40% 0f the GDP)which will create and contribute to a major economic/market rebound.
    But first ,it must be implemented. As of this moment we have an effective plan which has not been acted upon.
    Then what is the market responding to?
    Media disseminated fears enhanced by the opinions of the record shorts.
    Please note the record open short interest.
    Is should be clear that the financial system will not be allowed to fail.
    Once the process of direct liquidity injection begins ,the economic response will be quick and visible.
    For all of the irrational fears ,the dollar maintains its recent strength and is likely to make further major advancements reflecting the global perceptions that the real relative risks lie outside the U.S.
    This flight to quality (dollar)will result in explosive demand for the dollar denominated assets (equities and the real estate).
    I have warned about the current risks as late as September 18 ,2007 during the Brian Sullivan interview (Bloomberg TV)during the FED time.
    My fears were deflected by the market.Now ,everyone claims to have predicted the current debacle.
    More importantly the" experts" continue to distort the risks .The point is that in the U.S all of the issues have been identified and are being aggressive addressed,however we must allow at least six weeks for the program to be fully implemented to elicit the response that investors want to see.
    One more time,clearly the market had discounted the most pessimistic earnings estimates.At this point in time the only thing we should fear ,is the fear itself.
    We need to ignore the critics who perceived inflation as being a the threat(until recently),and now are calling for recession.
    One more aggressive easing in conjuction with the current measures could make a Christmas an enjoyable holiday that it should be.
    By the second half of 2009 ,the GDP growth should attain 5%.
    Reply
  •  
    Oct 16 04:42 AM
    Gabe B. you need professional help. What happens after "one more aggressive easing"? We're at 1.5 assclown. "All issues have been identified..." How about JPMorgan's $90,000,000,000,000 (trillion) derivative exposure. Really it's time you woke up.
    Reply
  •  
    Oct 16 07:50 AM
    For the record ,JP Morgan does not even have a fraction of the 90 trillion dollars exposure in the derivative market.
    This distortion of facts ,continues to drive market fears.
    The "stability aid" is the most effective plan that addresses issues to the point.
    This program will show mega effects after it is fully implemented.
    Another 50 bps cut would be helpfull.
    Commodity price implosion should increase real disposable income.
    Some incremental time is needed.
    By the time Christmas arrives we should have a major stability on the way to a major rebound.
    As I have stated earlier ,the only thing we should fear ,is fear itself-
    and perhaps CNBC .
    How can you expect impact from the program which is not implemented yet.
    I will say this again,recession can be deflected but the market had priced the recession as a done deal.
    Reply
  •  
    Oct 16 08:37 AM
    How problems do you solve if you put the price of gasoline under $2 again? It is under $3 now and I think if it stays there, we'll see the consumer rebound.
    Reply
  •  
    Oct 16 02:06 PM
    Be nice now. I personally agree with Gabe. Just my opinion though.
    Reply
  •  
    Oct 20 12:34 AM
    From Portfolio.com:

    "Morgan’s derivatives project began in the wake of the Asian financial crisis in 1997 as an attempt to protect the bank from bad loans. Demchak’s innovations worked—for his bank. Morgan came to dominate this corner of the financial world while preserving a culture of prudence. Morgan—deemed to be so safe that it snagged two of the victims of the financial-system collapse, Bear Stearns and Washington Mutual—is still swimming in credit derivatives, far more than any other firm on Wall Street, though the bank says it’s hedged. As of the second quarter of 2008, the bank had written derivatives contracts backing credit valued at $10.2 trillion, roughly three-quarters the size of the U.S. economy."

    Total exposure $90,000,000,000,000.
    Reply
  •  
    Oct 20 12:35 AM
    If you must keep your head in the sand, STFU.
    Reply
  •  
    Oct 22 02:46 AM
    www.occ.treas.gov/ftp/...
    Comptroller's office figures.
    Do you think they exaggerate risk, or minimize it?

    Gabe Borenstein shut up before you cause more damage. This is not funny.
    Reply
  •  
    Oct 23 03:07 PM
    How is Gabe doing damage


    On Oct 22 02:46 AM squashnut wrote:

    > www.occ.treas.gov/ftp/...
    > Comptroller's office figures.
    > Do you think they exaggerate risk, or minimize it?
    >
    > Gabe Borenstein shut up before you cause more damage. This is not
    > funny.
    Reply
  •  
    Oct 24 12:22 AM
    This is how:

    "For the record ,JP Morgan does not even have a fraction of the 90 trillion dollars exposure in the derivative market."

    Who is lying, the Treasury or Gabe Borenstein?

    Ignoring or underestimating enormous risk got us into this crisis. Even Greenspan admitted it today, way too late to save his sorry reputation.
    Reply
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