The fourth quarter is underway. In the last two weeks the indexes have reversed the rising trend.
Starting this coming week, companies will begin to show their numbers for the third quarter.
We've been waiting for the third quarter to reveal that the GDP is no longer shrinking and that the recession is "technically" over. We've been waiting for this since the end of 2007. Its been one long miserable period if we are judging the environment on economic activity alone. Hopefully we are not that focused.
What can we say? The investor class types are still expressing optimism that the numbers will be good.
Recall that the second quarter earnings reports propelled the indexes to their still surprising heights. Also recall that one of the reasons why these second quarter earnings reports looked appealing was because companies laid off tons of people and did all kinds of cost cutting moves in order to make the numbers look fair. That dog is gone. Now its are you making money or are you not making money.
I bet some did make money. Its going to be picking your way through a mine field because quite a few are going to look pale.
Reuters: Improved revenue could boost U.S. earnings
...an improvement in revenue is needed to sustain those gains.
The third-quarter earnings season will kick off with results from Alcoa Inc on Wednesday after the closing bell.
"We might start seeing some top-line growth in the third, and certainly in the fourth, quarter as in our view, the economy has turned and the recovery is well in place..."
"As of right now, the growth rates are improving for earnings and revenues..."
...the falling dollar was also seen as providing a boost to corporate earnings.
3 comments:
I'd made a pile of $$ as well if the Gov't sent me a few trillion. Do u think these klowns have a leg up on the restof us or what? They take our tax $$ and then they lay us off just to make a pt. Obama seems to think that if we give these thugs enough extortion $$ they'll open a few janitorial positions. NOT! Instead, they'll hire a few illegals and then threaten to deport them if they don't act like slaves. Oh and just so that they get the pt. the same Corps. will make sure they're funding the death squads at home so they know what will happen if they get deported.
One of the hottest stocks are the AmReits.
It seems to me that each president makes certain individuals very wealthy. These things are doing business with cheap money and government backed assets. This is partly what drives the economy. Its a new president and a new angle.
AmReit
1. aMREITs are not lenders and do not hold individual mortgages;
2. aMREITs are generally high yielding securities currently ranging from 13 to 25 percent non-qualified annual yield;
3. aMREITs invest solely or primarily in low-risk agency paper (Fannie Mae, Freddie Mac, VA, FHA) backed by the U.S. government;
4. aMREITs take advantage of the upward sloping shape of the yield curve, borrowing on a low-cost short term basis and investing in high-yielding, long term securities and generally have a net interest margin of 2 to 4 percentage points.
5. aMREITs borrow to apply leverage (4x to 10x) to the net interest margin to produce earnings and dividends.
6. aMREITs are organized as REITs and under U.S. tax law, they must pay out more than 90 percent of their earnings to retain REIT tax advantages.
7. aMREIT secondary offerings are generally accretive, not dilutive, as companies opportunistically take advantage of wider net interest margins and higher leverage.
Incidentally some of these things are paying 20% dividends. Now how do you pay out a 20% dividend in this recession if the money isn't backed by you and me?
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