- The stock market’s nice rally from early June has actually flattened out quite a bit recently.
- At some point, renewed “trade talks” are going to be viewed as the boy who cried wolf.
- Semis breaking slightly above old highs…Any further upside follow-through will be quite bullish.
- The early reaction to the DOJ’s new “antitrust review”: Surprising complacency.
- The yield curve is showing signs of reversing.
- If it steepens, it’s obviously going to have a BIG impact on groups like the banks & utilities.
Nice rally, but has been flattening out recently
News flash…earnings are coming-in better than expected!!! Of course, they have been better-than-expected every quarter since God was a child…because the estimates are always lowered enough so that they can be exceeded…but it does give something for people to talk about whenever the market rallies on a given day during earnings. Don’t get us wrong, the percentage of companies beating estimates is higher than usual. It’s about 80% so far vs. the usual number in the low 70s…but we’d also highlight that the stock market really hasn’t done anything over the past three weeks. So the reaction to the earnings season really hasn’t been anything special so far.
Actually, even though the estimates are always lowered enough that they can be exceeded, sometimes stocks SHOULD rally on better-than-expected earnings. However, that’s only when the stock market goes down at the same time the earnings estimates decline before earnings season. When the stock market RALLIES strongly in the 6-7 weeks leading up to earning season (like it did this time around)…while those estimates are coming down…it makes it difficult for stocks to sustain much of an “earnings rally.”
Earnings did not get all of the credit yesterday, however, as the market shot-up after a headline hit the tape…saying that ...