Failures and a Rescue

It was a busy weekend. First and foremost on my mind is the ""almost was" story of Tom Watson at the British Open. I can honestly say I was crushed when it wasn’t the 59-year old Watson holding up the Claret Jug when the tournament was done. 
Watson fought so hard, and played so well. To not win seemed unfair. But that’s golf. Still, it was a great story while it lasted. Bravo, Mr. Watson.

GOOG, GE, and NOK Drop on Earnings Reports

The earnings reports are flooding in. And while this season got off to a pretty good start with Goldman (NYSE:GS) and Intel (Nasdaq:INTC), we’ve seen a few companies come in with not-so-great numbers. Google (Nasdaq:GOOG), General Electric (NYSE:GE) and Nokia (NYSE:NOK) have seen their stock prices drop after they reported.

Goldman (GS) Beats Analysts Expectations

The day after the home run derby was held during baseball’s All-Star festivities, it’s probably appropriate that Goldman Sachs (NYSE:GS) hit it one out of the park. 
I’m referring to Goldman’s 2nd Quarter earnings blowout. Goldman beat revenue and earnings estimates by better than 30%. Clearly, just like the sluggers in the homerun derby, Goldman had softball pitches thrown right down the center of the plate to hit. 
Don’t forget that even the bears’ best friend, bank analyst Meredith Whitney, turned bullish on Goldman yesterday. It would appear that she could see the writing on the wall – analyst estimates were simply too low.

GS, INTC, JPM, GOOG, IBM, GE, BAC All to Report This Week

A few weeks ago, Treasury Secretary Geithner had to go to China to assure our largest creditor that their investment in the U.S. dollar was safe. Now he’s off to Saudi Arabia and United Arab Emirates for another round of "strong dollar" propaganda. 

Of course, it’s not an easy task to convince foreign governments that the U.S. wants a strong dollar when interest rates are at zero and we’re selling tens of billions in Treasury bills virtually every week. You may recall Geithner’s assurances elicited laughter from a group of Chinese college students when he made the strong dollar pledge there. 

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.