The Bunny Hop
By Todd Harrison Apr 12, 2004 8:31 am
That's a whole heckuva lotta earnings!
Good morning and welcome back to the critter attack. After a choppy and floppy week for the clan, the Minx ended where it began. We had gaps, earnings and a small dose of Beeks but when the fat lady sang, she had food in her cheeks. Fear not, ye faithful, for the rhyme will have reason as we're ready to start the real earnings season. Deep breath, some coffee and more caffeine still, for it's time to get rockin' for our race through the 'Ville.
It's hard to read too much into last week's holiday shortened session. We had a spate of fundamental appetizers that were good (Yahoo! (YHOO:NASD)), bad (Alcoa (AA:NYSE) and ugly (Nokia (NOK:NYSE). We had some decent economic news that served to embolden the economic recovery camp (despite continued concerns regarding the composition of the "blow out" payroll data) and, of course, we had continued concerns with developments overseas.
Thursday's trading encapsulated a dynamic that should become all too familiar in the months ahead. While that particular session was exacerbated by thinning ranks and pre-bunny terror jitters, the primary trading metrics were vying for investor's attention. Yes, earnings are widely expected to show healthy growth (17%+ year over year) but when increased geopolitical risk premiums are introduced, it makes for a much dicier overall equation.
While we can (but won't) debate the merits of our occupancy in Iraq, the focus (for purposes of the financial education) boils down to a) the presidential election and b) overall investor psychology. While history dictates that the Minx is bi-partisan, Wall Street firms have contributed almost five times as much to the Dubya campaign, a clear sign that the perception is that he's more market friendly. Thus, each "incident"--be it continued violence, international hostage situations or global terrorism--damages, on the margin, his effort. And, of course, from a much broader and more important human perspective, the delicate nature of the human psyche must be recognized and respected (particularly during the sentiment bubble).
Onward and upward, over 200 S&P companies will tell their tale this week and that should help mix the Minxy brew. Novellus (NVLS:NASD) will edge forward tonight, Johnson & Johnson (JNJ:NYSE), Merrill (MER:NYSE), Dow Jones (DJ:NYSE) and Intel (INTC:NASD) (among others) will dance tomorrow and a host of companies, including BankAmerica (BAC:NYSE), Delta (DAL:NYSE), Apple (AAPL:NASD), IBM (IBM:NYSE) and Sandisk (SNDK:NASD) will jump through Wednesday's hoop.
We power up today's ship to find marginally higher stateside futes (after sunny side up Easter eggs), a snoozin' Europe (lucky ducks), a higher Jinx (Nikkei up 1.2%) and better metals. The Minx, meanwhile is within spittin' distance of the all-important S&P 1150-1160 zone and the (relatively) tight corporate bond spreads bode well for an eventual test. For my part, I'm taking it light and tight until some mojo rises and stickin' true to my discipline.
Good luck today.
No positions in stocks mentioned.
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