Alcoa (NYSE:AA) An Indicator for Earnings Season?

Earnings season has begun. Alcoa (NYSE:AA) kicked things off with a report that was better than expected, even though the company lost $454 million in the second quarter. Yes, nearly half a billion dollars

Alcoa went on to say that aluminum demand will be down 7% this year. One analyst widened his loss estimates for the remainder of this year and 2010. And yet the stock is up 6% in the early going. 
How can that possibly be bullish, you ask?

G-8 Calls for More Stimulus Funds

Yesterday, Reuters reported that the delinquency rate on credit card debt hit 6.6% in the first quarter of 2009. On mortgage loans, delinquencies hit 3.5%. 
I can virtually guarantee both numbers were higher in the second quarter. And I expect them to move still higher in the future. 
Unemployment will continue to rise. And even when it stops rising, it’s not going to magically reverse course, not when the U.S. economy is only growing 1% or 2% a year.

Earnings Expectations Low Enough for Most Firms to Beat Them

Stocks rallied out of the hole yesterday. And the financial media, which started the day reporting that pessimism about the economic recovery was driving stocks lower, finished by saying that improvements in credit markets were driving stock prices higher. 

Neither explanation gets to the heart of the matter.

Where the IPO Market is Hot

And so it begins. I’m talking about earnings estimate revisions for banks. And yes, they are headed lower. First up is Morgan Stanley (NYSE: MS). Credit Suisse analyst Howard Chen was expecting a profit of $0.80 a share. Now he says a $0.40 loss is more likely.

Foreclosures Hitting Prime Mortgages and Banks

The Third Quarter is getting off to a rousing start. Economic data for the day is generally good – manufacturing shrunk less than expected and pending home sales rose more than expected. As of this writing (12:40 P.M. Eastern) the Dow is up 1.25%. Traders seem willing to forgive the larger than expected drop in private sector payrolls.  We’ll see how long that forgiving attitude lasts…

Case-Shiller Index Decline Seen as Improvement

Talk about boring. On Monday, around 10:30 AM, the S&P 500 rose above 924. By 12:30 PM, it rose to 927.99. Ignore the first hour of trading (when the S&P 500 made a comparatively wild 8-point swing), and the S&P 500 was confined to a 4-point range for 5 ½ hours. 

Commodities Run About to Turn?

The positive headlines are everywhere this morning. On Bloomberg alone, we read that the worst is over for Treasury bonds, factory output improved in Japan for the second straight month and home values in England remained stable for the second straight month. 
It’s enough to make you think that there’s an economic recovery underway…

Liquidity Programs and Opportunity Costs: U.S. Loss and China’s Gain

Yesterday, the Fed scaled back two of its liquidity-providing programs and announced it would let a third one expire on July 1, 2009.
Each program was designed to provide liquidity to securities dealers and money-market funds that couldn’t raise funds in the capital markets. The Fed noted that none of the programs were used anywhere close to capacity. And the improving economy and loosening of credit markets has made the programs less necessary.