How is it that the major indices rising is seen as the market waning?
- Wall Street waned on Monday as investors faced the prospect of a lackluster corporate earnings season and an economy that could be hitting a slow patch.
Correct me if I am wrong, but didn’t the market end up in the green yesterday? And didn’t Alcoa report a small drop in revenue, but an increase in profit yesterday after the bell? And isn’t the market pushing to end up in the green today, which would be a pattern change from its activity of the last two weeks? And isn’t China reporting to the world that its “slow down” policies worked and it is continuing its strong growth sans inflation?
- A softening of rises in food costs helped offset an increase in fuel expenses to bring overall inflation lower and give China’s central bank more flexibility over monetary policy. The news helped boost equity markets across the globe.
Oh, what a difference a day can make. Personally, I feel better today, less tired and more tuned into the market, but still cautious about my money in this market. Even though I sense the market still wants to go up, it can go down quickly on any bad news, or any news at all that is not positive unequivocally.
Yet, I also sense a difference in the market today. Perhaps the news from China is settling to the market after the employment report for March. Perhaps the market sees that report as an outlier of sorts, meaning, it is not yet convinced the sequester cuts will do that much damage to the US economy. I am not so sure those cuts won’t be felt over time, but as always, we will see.
Back to Alcoa for a moment … Since it is the first to report, and it is considered a bell whether stock, the market might not like the fact that it missed revenue estimations, a common reality these days for companies reporting. The stock is trading down, but the market is up.
Oops! The market just veered into the red. On the other hand, the market might like the fact that Alcoa supported its 2013 forecast with its projection the global economy will pick up this year. Oh! And there it goes back into green. In any case, Alcoa as a sign of earnings to come seems a bit silly.
- Since 2009, the company has bested the mean EPS forecast 9 of 16 times, and 73.6% of S&P 500 companies did the same. In the 7 quarters that it missed, 72.6% of companies topped expectations.
Switching gears … I love to watch transition in action, especially when that transition speaks to market opportunity coming faster than expected. As I have written, I am a fan of the American auto industry (Ford is an opportunity), but, truly I am more a fan of the transition there. Electric cars are coming, albeit slowly, but less slowly each year.
- The race to provide charging stations for electric vehicles heats up on the West Coast after Kroger joins Walgreen, Whole Foods, and IKEA to provide customers parking lot charging stations. Retailers continue to slowly edge into the field in an effort not to get left behind, but until a major restaurant chain (say McDonald’s?) jumps in with a partnership to offer a national network of charging stations along major interstates the phenomenon will remain aprimarily limited to affluent urban areas.
So, if McDonald’s, or any one of its ilk, makes the move, watch out. In the meantime, who is making the best electric car at the best price out there?
Back to Ford for a moment … The market has treated that stock with disrespect. Sure, Europe has taken its toll on Ford’s profitability, but the market can’t see past that, or so it seems. Well, that disrespectful attitude just might change soon enough.
- Ford (F) increased sales in China by 65% Y/Y in March to 81,387 units as new releases and a strong showing from the Ford Focus helped to boost results. The automaker plans to introduce 15 new models in China by the end of 2015
Yeh, I do feel better today, but after all my reading and writing this morning, I am tired again. But before I go for another twenty minutes of cat sleep, I just want to say that I don’t feel like the market is behaving irrationally today. I see it behaving as it should – hesitant but leaning positive.
Trade in the day; Invest in your life …
