Eye on Financial ETFs this Earnings Season

Earnings season is upon us and investors have been anticipating this news whether they like the numbers or not; markets and exchange traded funds (ETFs) are sure to respond accordingly. Financials are of particular interest after Wells Fargo’s preliminary earnings were released Thursday morning.

Earnings weakness for the first quarter is not expected to catapult the market, however, the anemic stock prices already reflect weak earnings. Does this mean weak earnings will kill the rally? The Big Picture reports that priced-in earnings weakness is more true at 6,500 than the Dow’s current 8,000 level.

Financials, in particular, are being watched closely. Investors are desperate for positive signs in the banking industry, say Stephen Bernard and Tim Paradis for the Associated Press. Positive earnings reports from the sector could indicate that the credit freeze could be starting to thaw.

Analysts are anticipating a 37% loss from one year ago, and all 10 groups in the S&P 500 show a year-over-year profit slide, a uniform decline that hasn’t happened in the 10 years Thomson Financial has been tracking such data, says David Gaffen for The Wall Street Journal. What many are listening for are the forecasts for the rest of 2009, the sentiment toward quarters two, three and four.

The biggest problem about that is who has the slightest idea about that far into the future in this market?

Earnings season is in full swing right now, and we’ve already seen a number of reports:

• Wells Fargo (WFC) reported that it expects a record $3 billion profit - far above analysts’ expectations; is this a sign of good things to come for the financial sector or just an anomaly?
• Alcoa (AA) fell just short of expectations, reporting a 54% drop in net income and a 6.7% drop in sales
• Family Dollar (FDO) beat expectations with a 15 cent per share increase over a year ago

More earnings are in the pipeline, including:

• Goldman Sachs (GS), Tuesday, before market open
• Johnson & Johnson (JNJ), Tuesday, no time given
• Google (GOOG), Thursday, after the close
• JP Morgan Chase (JPM), Thursday, 6:30 a.m. ET
• Citigroup (C), Friday, before market open
• General Electric (GE), Friday, before market open

Comments

[Investutopia:]

God I hope oil drops!

Apr 11 05:14 PM

[Jonathan Swift:]

My guess at 2 AM EDT Sunday (8 PM Hawaii time Saturday) is that the Monday market will open with lots of buying and by mid day will sell off. Leveraged long index ETFs (BGU and FAS) will start higher at the open and then fall before the end of trading on Monday. Just the reverse for leveraged short index funds (SDS).
Why am I going out on this limb? Maybe I'm a masochist, but it's actually an attempt to discipline myself to be more cautious about my enthusiastic prognostications. If the above predictions work out to be prescient, then I invite all readers to send me lots of money to start my own hedge fund.

Apr 12 02:22 AM

[citypound:]

The poem "April Inventory" by W.D. Snodgrass - ends with:

Though trees turn bare and girls turn wives,
We shall afford our costly seasons;
There is a gentleness survives
That will outspeak and has its reasons.
There is a loveliness exists,
Preserves us, not for specialists.

Apr 12 10:15 AM

[ECONOMICS 101:]

I like Richard's opinion above. It resonates of a "invisible Hand" at work. Could it be the NWO and AMERO theory? I believe it is. Read the book of The Island of Jekyll and Hyde for more info and clarity when it comes to Global Economies. Remember, The FED is a privately owned corporation by individuals and not the US Government. By Johnathan Vrozos

Apr 12 10:38 AM

[carey_jim:]

With eagle vision, from a thousand feet up, I'm looking down on a field of scurrying corporate mice. I see shadows and green. There are objects that look like wheel barrows and they are full tax payer money.

I can see it more clearly now. Money is 'trickling down' from wheel barrows into the pockets of the mice.

Yes, 'trickle down' is back.

There are jubilant, squeaking noises. I hear corks popping from champagne bottles.

I'm going to swoop down and take a mouse. I'm hungry.

But some of these mice look scurvy. Which one should I eat?

Apr 12 11:02 AM

[billyboy54:]

Richard Wendling, thanks very much for the info.

I'm a retiree managing my own money (I trust no one !), and took the radical step of selling all my long mutual funds in Dec 07, and buying some inverse funds (DOW, RE, EmerMKT) and going long gold and silver, and paying no attention to pundits, CNBC, MarketWatch, Bloomberg, or the News.

As a result, I'm up 12% from end of '07, not as much as I had hoped, but had I listened to anyone else besides Jim Sinclair and some others, I'd be like my lifelong friends who lost 40% of their savings of 45 years !

I'm going to pay more attention to all these factors you're suggesting, and maybe I can do even a little better.


On Apr 12 05:07 AM Richard Wendling wrote:

> You are missing the one most manipulative force in the market place
> today that no one talks about and that is the "Specialist" who runs
> the stocks and his system that controls the market place in general.
> Nothing happens without their approval. These individuals and their
> system control "all" the actions of the stock market and its movements
> higher or lower.
>
> For more information on the system and my opinions on where the DJIA
> and certain individual stocks are headed in the short, intermediate,
> and long term go to my website listed above and read the information
> on both the system and stocks.
>
> It costs you nothing except the amount of time you need to read the
> articles. It will greatly improve your ability to invest profitably
> in the market place in the future.
>
> Richard

Apr 12 01:06 PM

[Samuri:]

Earnings Season is Upon Us.

But my love is bigger than a Honda
It's bigger than a Subaru
Hey man there's only one thing
And one car that will do
Anyway we don't have to drive it
Honey we can park it out in back
And have a party in your pink Cadillac

Earnings Season is Upon Us.

Apr 12 02:41 PM

[Alan Young:]

Goldman Sachs reporting Tuesday morning means that the market can't fall until Wednesday. Love it or hate it, they run the Treasury and there's no way they will report bad earnings.

Apr 12 03:06 PM

[D Chef:]

I'm a gambler, baby. My thought is GS drives it all higher for a day, then down 2% for a day, then sideways 4 days. My dog told me this, and I believe her more than anyBODY.

Apr 12 06:17 PM

[User 368248:]

George Soros was recently asked, "What is going to happen to the dollar?"
Soros: "I know exactly what is going to happen to the dollar, but I won't tell you."
If George ain't talkin', it may be time to do some walkin'.

Apr 12 08:56 PM