Earnings Expectations and Toxic Assets

Stocks have marched steadily higher since March 9. The first 10 days or so of the rally was a mad dash, which is how recovery rallies behave. But since the huge up day on March 23, stocks have settled higher. The S&P is now within spitting distance of its 2009 highs.

Builders PHM, CTX, HOV in the News

The saga continues for the homebuilders. Last week, we saw the first steps toward consolidation in this sector when Pulte Homes (NYSE:PHM) bought out Centex (NYSE:CTX). This came on the heels of some slight improvements in existing home sales.  
Even yesterday, a builder sentiment survey showed an improvement among builders. That got investors excited for this morning’s housing starts number. Unfortunately, the optimism was misplaced. Housing starts came in below expectations for March.

Oil Steady Around $50 a Barrel: Economic Bellwether

I hate to keep talking oil here, but the sticky stuff is a great proxy for what’s going on with the economy and the financial markets. On the one hand, demand is down considerably, even OPEC has cut production and inventories are rising to the point that some analysts are saying "…we’re swimming in the stuff…"

Goldman Blows Out Earnings: Numbers vs. Actions

"Given the challenging fundamental backdrop in the global economy, we continue to be cautious about the near-term outlook for our businesses …" 
That’s what Goldman Sachs CFO had to say after it posted pretty good earnings numbers on Monday. Of course, no one in the banking sector in his or her right mind is going to say things are great. But numbers are one thing, actions are another.

Financials Lead

Thank you, Wells Fargo. The S&P 500 ramped nearly 4% on Friday as Wells Fargo said it expects its first-quarter earnings to be nearly double what analysts were expecting. And it wasn’t even Wells Fargo’s earnings day – the company pre-announced earnings that will be released on April 22. These days, if you have something to crow about, you do it. ASAP.

Earning Season Starts with AA, BBBY, and CVX

Time flies. Seems like earnings season just ended and yet here we are again. But first-quarter earnings kick off tomorrow with Alcoa (NYSE:AA). 
Given how far the stock market has come over the last three weeks, you might think stock prices are set up for a fall as the reality of earnings dashes the enthusiasm that economic recovery is at hand.

HOV and GHM still in the green

Unemployment numbers continue to rise, but investors are more focused on the hope that the economy has bottomed and may be positioning for recovery. At least for now. 
Please note that I said "positioning for recovery." Mortgage rates are down and that seems to be helping the housing market a little. Credit afforded by the Treasury aimed at removing toxic assets from banks is resulting in higher valuations for those banks. 

GM Bankruptcy; HOV in the Green; RGLD, MYGN, NFLX Best Picks

Even before they’ve had the chance to present a third (or is it fourth?) turnaround plan, President Obama has said bankruptcy is the best way for GM and Chrysler to deal with their problems. 

GM would be able to restructure with bankruptcy protection, but apparently it’s a lost cause for Chrysler if the proposed Fiat merger fails. GM’s got around $47 billion in debt it has to deal with.

HOV Gives Up Gains + Oil Shock for Late 2009

*****Today is the last day of the second quarter. Mutual funds are no doubt buying the top performers to make their holdings look good. That helps explain today’s rebound. But what about yesterday’s declines?  
Obviously, a quick 25% rally is going to have investors taking profits. This was especially apparent in the small-cap sector. It’s well known that small-cap stocks outperform when the stock market is recovering from a deep sell-off. Average gains for small caps digging out of the hole are 24%.  
And we saw almost exactly that level of gain with Hovnanian Enterprises (NYSE:HOV)