Is everything subjective?
With 89 percent of the S&P 500 companies having reported earnings so far, 66.7% have surpassed profit expectations, above the average of 63% since 1994. However, only 46.4% have beaten revenue expectations, well under the average of 62 percent since 2002. (Factset) As I mentioned last week, when sales revenue continues to be reported as less than spectacular and earnings data are above estimates, something is incongruous here. Correspondingly, when the number of Americans filing new claims for unemployment insurance falls to its lowest weekly level in more than five years, it’s a fantastic signal that the job market is improving, but still not at the speed and breadth needed to jumpstart the U.S. economy.
Last month’s string of weak economic numbers were a disappointment, to say the least, but they were to be expected, as the sequestration has been making a very prominent appearance in regards to the day to day life of millions of Americans. This week will bring a new batch of prominent economic reports and with options expiration at week’s end, I would expect a fair amount of whipsawing volatility, but I’ve been proven wrong before. The Dow and the S&P 500 carry on setting another string of record closing highs, it’s anybody guess what the outcome will actually be.
I remain optimistic. I’ll continue to have concerns regarding a technical pullback as we move through this quarter. The market’s strong performance thus far this year has increased the probabilities of equities rallying throughout the year, but I ‘m ever so cautious about the fundamentals. The market is driven by good fundamentals from corporate earnings and with sales revenue being unimpressive in our consumer based economy, I’m forced to think of it like a lingering bad taste in your mouth after eating something that was pleasant, you’re searching for a sweet lozenge to cover up that flavor.
Have a great week!