So yesterday was a lesson for those who are perma x.
Despite all the negativity bears had their asses handed to them like a jerk with beer muscles.
We opened with prospects of the dollar getting crushed along with any hopes for decent earnings getting extinguished like a moth to the flame.
Then suddenly the dollar corrects. It does not matter that it closed flat on its index, but rather that it did not get crushed.
Keep your eye on the dollar as your guide. How many times do I have to tell you this?
This sent oil down from its morning pop and then Dolly Dagger lost the energy to blow anything important away.
This really smacked oil down along with equities going higher on oils demise. Well not a demise, but continued correction.
This gives hopes that the FED will have more room to wiggle and perhaps increase the chance of rate hikes. This implies help to credit spreads getting better and perhaps improving our over all liquidity crunch and economic outlook. As usual, this is a nice attempt of applying logic where it should not be for the moment.
At any rate, today is a new story to be written. The dollar is at a one month high and oil is down over 1%.
We have oil and gasoline inventories today. Some how I feel the numbers will be bearish. Secondly and most importantly we have the Beige book. But one can argue we already know the problems in the economy.
As for earnings: Well there was a lot of beats after the close and this morning~ [[ISRG]] [[RJF]] [[TESS]] [[AKS]] [[UMB]] [[BKR]] [[VOCS]] [[MRH]] [[NSC]] [[PFE]] [[WYE]] [[PEP]] [[CBBO]] [[PM]] [[MCD]] [[EMC]] [[COP]]
As for misses the most interesting was~ [[WM]] [[WTNY]] [[FTBK]] [[LLTC]] [[MBHI]] [[TRMK]] [[SEAB]] [[ETFC]] [[NVR]] [[COST]] [[GSK]]
So far on the S&P 140 companies have reported with 90 beating the street and 50 either in line or missing.
The futures are indicating a higher open. Europe and Asia are rallying off of the dollar oil issue.
I currently have no shorts on, but I will become more market neutral as we see the S&P get closer to 1300-1325. Today’s hurtle is 1281 S&P.
While earnings are getting some excited about the future, companies like [[COST]] remind us of input costs in regards to high energy prices. Over the longer term if oil does not get smacked below and stay below $100 p/b then almost every company will have EPS pressure. Somehow I do not believe this will happen.
I will begin to get short over the next couple of days to weeks by getting long SRS and shorting COF, NLY, HRB, & RF. While I think the absolute short term top is 1325 S&P, this market has surprised everyone many times.
As always I will build into the positions.
GLT
by GW
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