All eyes are on DJIA 14,000 while, at the same time, ignoring poor market breadth.
Earnings are starting to come in, and one highlight was Merrill Lynch. Nearly one-third of its revenues are now sourced from "trading" [$3.55 billion] -- its largest single source of revenues. How much of that is from program trading I wonder? Do you care? Should you? Let's put it this way: the table below is something the Fed's primary dealers like Merrill Lynch & Co. Inc. (MER) would prefer not discussing. But others care, and this dated article reinforces what we've noted. These firms aren't your father's brokerage firms.
These comments aside, earnings news is just beginning in force. This will continue this week and next. So far the news has been good, but stock prices have not reacted that positively. MER beat estimates but closed lower on the session. Later, both Yahoo! Inc. (NASDAQ:YHOO) and Intel Corp. (NASDAQ:INTC) beat estimates overall (I think), and are much lower in after-hours [a/k/a amateur hours] trading. So, it's been "sell the news" thus far.
"Blinded by the Light" might have been a better theme, since the financial media is obsessed with DJ 14,000. At the same time however, most market sectors are struggling thus far this week. And good earnings have been met with early enthusiasm and late selling.
Bernanke begins his testimony Wednesday, and Barney Frank is wondering why the Fed should worry about inflation. [How brilliant a chairman is he?] Not to worry Barney, they don't worry about inflation either since they have the "core rate" to keep them warm.
We have more earnings news, the CPI and energy inventories to keep folks on edge.
This could be a very interesting week but then, aren't they all?
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