On The Run 01.22.13

I've a lot on my plate.  The biggest time consumer today {and the rest of the week for that matter} is listening to a wide assortment of earnings conference calls.  This is likely the most important week for earnings this cycle and this may be the most important earnings cycle in a few years so posting may be a bit light for awhile.  The reason this week is highlighted is that we may get some economic clarity regarding earnings.  

There has been a big debate in the Wall Street community regarding earnings and economic growth.  Optimists are looking for earnings growth this year of between $111-113 on the S&P 500.  Pessimists sighting slowing economic growth and among other things the hit to consumers from this January's Federal tax increases think earnings will come in somewhere in the $100-105 range.  So far the pessimists seem to be winning.  While earnings are coming in OK right now, consensus estimates for 2013 have been trending down.  This tends to be problematic for higher stock prices.

For the record our current cone of probability sees 2013 S&P 500 earnings between $102 and $112 and a current midpoint of $106.50.  I think I'll be able to narrow that range in the next two weeks.  Obviously what companies say in these next two weeks will likely have important implications for stock pricing going forward.  

In the meantime stocks have started the year with something like a 4% gain which is a pretty good move in a very short period of time and mirrors a similar move in the same time period last year.  Against expectations stocks continued rising through March of last year so we'll see how it turns out.

Away from the market the grand economic pundits, political gurus and hangers on convene in Davos this week, Japan goes all in on economic stimulation and is seeing a spat over some barren islands that it has been having with China looking like it has the potential to be something more on the international event horizon.  Stay tuned....