It’s Monday, and the market is acting like anyone with a job – it’s hard to kick it into gear on a Monday. I wonder, what is the brick in the “wall of worry” today?
I suspect it is the “never stand under a falling knife” maxim. Earnings are coming, and surprise, surprise, investors are waiting to see how they turn out. Well, I am in the camp that says get in now, while the getting is good. Here’s why …
U.S. corporate earnings made analyst estimates look far too bearish over the last few quarters, beating estimates and rallying during 2009. Thus, it’s easy to think analysts’ excessive pessimism has run its course and now they are expecting too much from companies — but Citi’s Steven Wieting is taking the hard road.
This earnings season, for Q1 earnings, he thinks U.S. companies are going to report even higher earnings than analysts have forecast. Yet again. His S&P 500 aggregate earnings estimate is already 6.4% higher than consensus in anticipation of this wave of ‘earnings beats’. Think it’s wild? He calls current analyst expectations an ‘Easy Hurdle’ for stocks to beat this earnings season.
Wieting is not alone. Many analysts are predicting more earning beats this quarter. So why is the market hesitant? The market is always hesitant, unless the bandwagon is rolling and everyone is clamoring to get on board. Sometimes it is better to ignore the market, as it is not always true that “the market is always right.”
By the way, is anybody still out there reading this column?
Trade in the day; invest in your life …
