Art Hogan
Art Hogan
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We're seeing better earnings news in corporate America. That's what the market is celebrating, ... We made major collateral damage to stocks in the last six weeks and over a larger 2-1/2-year period. What's happening now is that the market is bottoming out and is building a higher support base in the process.
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We're seeing a nice handful of earnings today. That is going to be the driver. The other driver, or the thing that's not going to hold us back this quarter, and I would argue has held us back the last three quarters, is the consensus is the Fed is done for the year, ... We don't have a credit tightening cycle to go through and we're seeing terrific earnings. So I would argue that the focus returns now to earnings growth, revenue growth, the strength of corporate America and not necessarily the macro-economic themes like monetary policy which have been on the forefront for the last couple of quarters.
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We've got more ongoing focus on the bond yields. We've been in lockstep with it all week, and today is no different. There aren't any market-moving items due today, so we'll look at energy prices today for something else to drive the market.
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We have to get used to the fact that the emergency level of the fed funds rate is behind us, ... The sooner we become cognizant of the fact that the global economy won't be crushed and corporate earnings won't roll over, the sooner the market will fight its way to trend higher.
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When you see a deal of this size, obviously (Washington Mutual) is still acquirable,
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We're still in the pre-reporting season, so, we'll hear more warnings from corporate America, hopefully more positive than negative in terms of guidance.
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We're starting to see that companies are starting to admit that the second half is going to be slow, so that's a lingering fear,
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We've been able to handle a lackluster earnings season so far. Energy companies haven't really come into the fray yet, so things may look a little better after they report. Another positive is that we're backing off a bit from the high price of oil.
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We bought on the rumor and are selling on the news, ... We've priced in the victory here. There's very low participation -- there's just no money in the game. Folks are starting to shift focus now.
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I think 50 basis points (one-half percentage point) is a credible consensus estimate for what the Fed does (at its March 20 meeting). Unfortunately, over the last five or six tumultuous trading days, we've talked ourselves into the fact that the Fed cares about equity valuations, but that's not the case.
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Cleary this had been a disappointing first half. But I would argue that long-term investors need this kind of an education to show them that markets don't go up forever.
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Clearly, we will see stabilization. It's just a matter of when.
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Clearly we're starting to see a pattern. The job that they're (the Fed) doing is starting to work.
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Clearly, this is a severe blow to Microsoft, ... I think upon appeal it may not be as harmful to Microsoft at the end of day as it appears, but it's clearly disappointing and it will set a negative tone to the market.