October 13, 2012 at 11:25 AM EDT
How is Big Hope For Bank Earnings Working Out So Far?
Saturday, October 13, 11:30 a.m. As the end of the 3rd quarter approached and corporations and Wall Street played their quarterly game of under-promising on earnings so they can easily over-deliver, they had no choice but to cut estimates so far that the 3rd quarter is forecast to see S&P 500 earnings growth halt and [...]

Saturday, October 13, 11:30 a.m.

As the end of the 3rd quarter approached and corporations and Wall Street played their quarterly game of under-promising on earnings so they can easily over-deliver, they had no choice but to cut estimates so far that the 3rd quarter is forecast to see S&P 500 earnings growth halt and turn negative for the first time since 2009.

The energy and materials sectors are expected to show the biggest earnings declines, while the banks and financial sector are forecast to show the most impressive earnings.

JP Morgan Chase (JPM), and Wells Fargo (WFC) reported yesterday.

Bank of America (BAC), CitiGroup (C), Goldman Sachs (GS), and Morgan Stanley (MS) will report next week.

With the major banks reporting early in the reporting season Wall Street is hoping, even forecasting. that their reports will give the market a boost and a more positive tone to help it withstand the more problematic reports expected from other sectors as the reporting season continues.

So far, the market hasn’t gotten that financial sector boost that was hoped for.

Even though JP Morgan Chase and Wells Fargo’s both reported earnings that were stronger even than Wall Street’s forecasts (Surprise! Surprise!), Wells Fargo’s stock plunged 2.6%, and JP Morgan Chase lost 1.1% yesterday.

And the S&P Bank Sector Index lost 2.7%.

101312e

Fewer earnings reports are beating even lowered estimates so far.

In spite of the aggressive efforts of corporations this time to guide lower in advance of the 3rd quarter reporting period, fewer than normal S&P companies are beating the estimates so far.

Only 6% of S&P companies have reported. But Thomson-Reuters reports that only 59% have beaten the estimates compared to the average of 67% for the last four quarters.

How is 3rd Q and 4th Quarter GDP shaping up?

Here’s what Morgan Stanley’s chief economist Vincent Reinhart sees according to a report this morning on Business Insiders website Morgan Stanley Found Two Red Flags In This Week’s Trade Report, And Now Its Forecast For Next Quarter Is Not Pretty.

“A soft international trade report (Thursday) showed increasing weakness in the two key areas that have turned into growing drags as the economy has slowed over the course of the year, exports and capital spending.  . . . . which means that domestic demand for equipment was even weaker than initially indicated by the drop in capital goods shipments in the Durable Goods Orders reports. . . . . Incorporating the results we see the weakest results for exports and investment since the first half of 2009 when the economy was still in recession.”

Chart courtesy Bloomberg, Business Insider.

Core capex orders

Reinhart goes on to say: “These downgrades cut our 3rd quarter GDP growth estimate to +1.5% from +2.1%, of which inventory accumulation is expected to account for 0.9%. The business inventories report on Monday will likely show a further rise in combined retail, wholesale, and manufacturing inventory/sales ratio to the highest level since late 2009, raising risk of a cutback in inventories weighing on economic growth in the 4th quarter.” 

Other voices:

Reuters, Tokyo: “World finance leaders (meeting in Tokyo) on Saturday endorsed a checklist of policy reforms aimed at pressuring Europe and the United States to tackle debt troubles that threaten to choke off global growth. To hold each others’ feet to the fire the nations agreed to review progress in six months.”

To read my weekend newspaper column click here: Consumers and Investors are Confident Even As Global Recession Threatens. Oct. 12, 2012.

Subscribers to Street Smart Report: In addition to the charts and information in the ‘premium content’ area of this blog, the new issue of the newsletter from Wednesday, and an in-depth ‘Gold, Bonds, Dollar, Commodities’ report from yesterday, are in your secure area of the Street Smart Report website.

Yesterday in the U.S. Market.

A mixed day, positive at the open, building on the strength after the release of the consumer confidence report that had the Dow up 75 points mid-day. But then another downside reversal in the afternoon that had the Dow down 30 points mid-afternoon, before some last-hour buying came in to close at least the Dow up going into the weekend. But only up 2 points.

Trading volume was light at 0.6 billion shares traded on the NYSE.

The Dow closed up 2 points, not measurable as a percentage. The S&P 500 closed down 0.3%. The NYSE Composite closed down 0.4%. The Nasdaq closed down 0.2%. The Nasdaq 100 closed unchanged. The Russell 2000 closed down 0.8%. The DJ Transportation Avg. closed up 0.9%. The DJ Utilities Avg closed down 0.7%.

Gold closed down $12 an ounce at $1,754 an ounce.

Oil closed down $.31 a barrel at $91.76 a barrel.

The U.S. dollar etf UUP closed down 0.1%.

The U.S. Treasury bond etf TLT closed up 0.2%.

Yesterday in the Americas outside of U.S..

Argentina closed down 0.9%. Brazil closed up 1.2%. Canada closed down 0.4%.

Yesterday in European Markets.

European markets were down again yesterday. The Europe Dow closed down 0.2%. The London FTSE closed down 0.6%. The German DAX closed down 0.7%. France’s CAC closed down 0.7%. Italy closed down 0.8%. Russia closed down 0.9%. Spain closed down 1.1%. But Greece closed up 3.3%.

Global markets for the week.

An ugly week, the 3rd down week out of the last four.


THIS WEEK (October 12)
DJIA13328- 2.1%
S&P 5001428- 2.2%
NYSE8227- 1.9%
NASDAQ3044- 2.9%
NASD 1002720- 3.2%
Russ 2000823- 2.4%
DJTransprts5044- 0.1%
DJ Utilities475- 0.9%
XOI Oils1,229- 2.5%
Gold bull.1,754- 1.6%
GoldStcks185- 3.5%
Canada12202- 1.7%
London5793- 1.3%
Germany7232- 2.2%
France3389- 2.0%
Hong Kong21136+ 0.6%
Japan8534- 3.7%
Australia4510- 0.1%
S. Korea1933- 3.1%
India18675- 1.4%
Indonesia4311unchgd
Brazil59161- 1.0%
Mexico41665- 0.6%
China2204+ 0.9%
LAST WEEK (October 5)
DJIA13610+ 1.3%
S&P 5001460+ 1.4%
NYSE8384+ 1.6%
NASDAQ3136+ 0.6%
NASD 1002811+ 0.4%
Russ 2000843+ 0.6%
DJTransprts5046+ 3.1%
DJ Utilities480+ 0.9%
XOI Oils1,260+ 0.1%
Gold bull.1,782+ 0.6%
GoldStcks191+ 0.3%
Canada12418+ 0.8%
London5871+ 2.2%
Germany7397+ 2.5%
France3457+ 3.1%
Hong Kong21012+ 0.8%
Japan8863- 0.1%
Australia4513+ 2.4%
S. Korea1995- 0.1%
India18938+ 0.9%
Indonesia4311+ 1.1%
Brazil58571- 1.0%
Mexico41934+ 2.6%
China21840
LAST WEEK (September 28)
DJIA13437- 1.1%
S&P 5001440- 0.3%
NYSE8250- 1.5%
NASDAQ3116- 2.0%
NASD 1002799- 2.2%
Russ 2000837- 2.1%
DJTransprts4892- 0.4%
DJ Utilities475+ 0.9%
XOI Oils1,258- 2.1%
Gold bull.1,772- 0.1%
GoldStcks191- 2.1%
Canada12317- 0.7%
London5742- 1.9%
Germany7216- 3.2%
France3354- 5.0%
Hong Kong20840+ 0.5%
Japan8870- 2.6%
Australia4406- 0.5%
S. Korea1996- 0.3%
India18762+ 0.1%
Indonesia4262+ 0.3%
Brazil59166- 3.5%
Mexico40866+ 1.3%
China2184+ 2.9%

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Next week’s Economic Reports:

Next week will be an average week for potential market-moving economic reports, including Retail Sales, Industrial Production, Housing Starts, Existing Home Sales, etc. To see the full list click here, and look at the left side of the page it takes you to.

However, probably of more importance, the 3rd quarter earnings reporting period continues.

To read my weekend newspaper column click here: Consumers and Investors are Confident Even As Global Recession Threatens. Oct. 12, 2012.

Subscribers to Street Smart Report: In addition to the charts and information in the ‘premium content’ area of this blog, the new issue of the newsletter from Wednesday, and an in-depth ‘Gold, Bonds, Dollar, Commodities’ report from yesterday, are in your secure area of the Street Smart Report website.

I’ll be back with the next regular blog post on Tuesday morning at 9:25 a.m.

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