The Incredible Shrinking Earnings Forecast

It is the reason that investors should proceed with caution when relying on forward earnings to determine stock valuations. Not very long ago, at the start of the New Year, corporate earnings were forecasted to increase on a year-over-year basis by more than 20% in 2015. But only a few weeks later, this robust earnings outlook has not only completely evaporated, but projections are now for earnings growth to turn negative starting in the second quarter. And given the fact that these earnings forecasts continue to shrink further with each passing week, it is likely that the actual results may end up much worse than where the already significantly downward revised forecasts stand today. If history is any guide, this developing and deteriorating outlook for corporate earnings bodes ill for the stock market in the months ahead.

Please click on the link to read more of my article on Seeking Alpha.

Volatility: Up She Rises

Volatility in the U.S. stock market is building. While it may not be readily apparent in the headline readings, it is creeping along under the surface. And the more this volatility builds, the more the sustainability of the long running post crisis bull market may be at risk.

Please click on the link to read more of my article on Seeking Alpha.

U.S. Stocks: Oh Behave!

The U.S. stock market continues to behave remarkably well. Such persistent resilience among U.S. stocks is notable for a bull market that recently entered its seventh year of largely uninterrupted gains since the quelling of the financial crisis in early 2009. And as long as the uptrend remains intact, investors are best served to respect it until warning signals emerge to confirm that definitive change in trend may actually be taking place. With this downside risk in mind, it should be noted that headwinds continue to accumulate for this market with each passing week, so investors are equally well served to avoid becoming complacent as we continue through 2015.

Please click on the link to read more of my article on Seeking Alpha.

The Fed Trade That’s Money In The Bank

Global markets breathed a collective sigh of relief this week. On Wednesday, many investors were expecting that the U.S. Federal Reserve would emerge from their latest Open Market Committee meeting with hawkish suggestions that interest rates would be on the rise perhaps as early as June. But once the statement was released and Chair Yellen took to the podium with downward revised economic growth forecasts, investors took these more dovish tones as a signal that Fed rate hikes would be coming much later than originally expected. Market euphoria ensued from 2PM on and continued through the remainder of the week across virtually all asset classes including stocks, bonds and commodities. But not every corner of capital markets were pleased at the prospects for Fed rate restraint. And this sliver of differentiation may provide a particularly useful trade for investors once the inevitable Fed rate hikes finally get underway.

Please click on the link to read more of my article on Seeking Alpha.

Oil: Dallas Sellers Club

A notable disconnect has recently unfolded in the oil market. After modestly bouncing through February, oil prices have rolled back over to the downside in March to fresh new lows. But the regional banks that are most directly exposed to the oil sector and have followed in oil’s path since late November have suddenly headed off in their own direction by maintaining the recent upside bounce. This deviation sets up a key showdown in the coming weeks. Either oil’s recent slide proves temporary, or these regional banks with oil exposure may ultimately face renewed pressure to the downside.

Please click on the link to read more of my article on Seeking Alpha.

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