EARNINGS SEASON

A couple of weeks ago earnings season began. About the same time worries over China and the falling price of oil hit the market and for the most part it's been anything but what many expected.

Most by now know the China and low oil prices story. But earning might turnout to be a disappointment for markets that rivals those two. A blurb in the the WSJ notes:

Since companies began announcing results two weeks ago, corporate earnings have moved in the wrong direction.

With 15% of the companies in the S&P 500 having reported results, earnings for the index is expected to contract 6% for the fourth quarter, according to FactSet’s blended earnings forecast. That’s down from the 5% decline analysts anticipated for the S&P 500 on Dec. 31.

If that rate holds through the end of quarter, it would mark the steepest slide in earnings from the year prior quarter since the first quarter of 2009. It would also be the third straight quarter earnings have declined. The last time that happened was during the first three quarters of 2009.
A stronger dollar and tumbling oil prices have weighed heavily on the overall earnings picture of the S&P 500. This latest disappointing earnings season comes as stocks around the world have tumbled on concerns about global economic growth.

Now there's a lot of quarters in there, but don't get confused. It's the trend. Adding to the earnings picture woes, the article continues, are recent results from Goldman Sachs and Legg Mason, both asset managers, as firms in this sector are being hard-hit by withdrawals and low interest rates not to mention the general mood of investors and the global outlook. Though as pointed out the energy sector accounts for much of the decline, providing a convenient scapegoat, there are other problems like fiercest competition and price cutting afoot among these big boys.

In the meantime, forget pulling out your crying towel for these big asset boys and girls with their huge bonuses, they don't mind taking your hard earned money with fees and the like in the good times. We refer you to, once again, the comment the billionaire CEO of BlackRock made in our piece, An Interesting Specimen, financialspuds.blogspot.com.

Keep your eye on earnings as the pallor spreads and hopes of them providing support for the market fade.