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MV Weather Report: High Tide for Bank Earnings


Rain or shine, we review the day's biggest stock stories.


It was another slow, light news day on Wall Street as stocks were relatively flat and investors await earnings announcements later in the week.

The S&P 500 closed the day lower by -0.26% to 1073. During the trading day, the index stayed in a narrow range between 1066 and 1075.

The S&P 500 is within five points of its high for the year but the index has had trouble breaking through to new highs. Today on the Buzz and Banter, Professor Branden Rife gave his thoughts on the index.

"Was a S&P 1080 test failure just a little too easy given the light volume?

"Back of the envelope... 15x a $72 eps estimate for 2010 gets you to…..1080. Either the estimates have to go up or the multiple has to increase to justify sustainable higher prices.

"Which S&P long term downtrend line will the tape be keying off of? 1081 (remember we tested 1080 yesterday) or 1100…

"Is 1084 or 1230 the calculated price objective from the two different S&P reverse head & shoulders from the bottom? It depends on which one you are using to calculate it. One is smaller time frame and one is bigger.

"Will FX currency benefits be viewed as sustainable or seen as a quality of earnings issue with risk to future comps?"

Professor Rife brings up some great points. Right here according to his estimates the market is fairly valued. But as he says, the multiple needs to increase or the EPS estimates need to increase.

The boring market should die off tomorrow morning when JPMorgan (JPM) reports earnings before the bell. The bank will kick off earnings for Citigroup (C), Bank of America (BAC), and Goldman Sachs (GS) which are out later in the week.

Analysts expect JPMorgan to report EPS of $0.49 on revenues of $24.8 bln. JPMorgan's earnings are expected to be driven by capital market strength, higher investment fees, and a slowdown in reserves build. A few concerns to watch for are credit costs, credit deteriorations, and potentially higher expenses (thanks to for the information).

Also before the bell, investors will be waiting for export price, import prices, retail sales, business inventories at 10, and then FOMC minutes at 2.

It looks like the action is about to pick up tomorrow. Have a great night!

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