It has been one busy week of earnings in the first three and a half days on Wall Street.  Just this morning we had AT&T, Eli Lilly, Autonation and Southwest Airlines all report this morning.  I have not listened to all their earnings calls yet but we have heard and seen some positive news.  AT&T reported growing free cash flow while increasing expenditures on infrastructure and acquisition costs.  The company reported an uptick in land lines which was the first time we have heard that in a long time.  Southwest Airlines reported a solid earnings number in an industry that cannot make money overall.  Their CEO said “They expect oil and fuel prices to increase going forward as any increase in demand will increase prices because of a supply shortage.”  Autonation CEO was extremely upbeat as well on his brief segment on CNBC this morning.  He said markets should see continual gradual growth over the next couple years to a annual sale of 16 million units a year which will allow these sellers and car manufacturers (my favorite Ford).   This is being fueled by both a car refresh cycle by consumers as well as adding 750,000 families a year.  He said on average each family owns 1.5 cars, so that increases demand quickly.  The car seller also said that they were able to increase their profit on each car sold by over 10% in this current quarter showing me that at least the US market has more money to spend than people are saying.

Busy Week of Earnings

We have had volatility in this busy week of earnings.  Last weekend, I wrote about how I felt the 2 week rally we had starting October off would not continue in a straight line.  Between the open on Monday and the low on Tuesday morning, we were down 400 points, almost to rally back to last week’s closing price with less than a half day to go yesterday, but closed sharply lower.  The VIX and VXX have been bouncing all around.  We had rumors of the “recession” word creep back into the markets.  European fears came back as well.  Last week it seemed some stress was starting to lift in the markets, but has been abruptly brought back in this busy week of earnings and news.

Most news upbeat in this busy week of earnings

I highlighted some of the positive news just this morning above, but we have had so much more.  We have seem mixed news in this busy week of earnings, but I would weight it as being more positive news than negative.  American Express had a solid earnings beat this quarter saying consumers have spent more recently.  Thomas and Betts beat this morning and raised guidance.  I find this interesting because Thomas and Betts is an industrial name that primary markets it sells in are the United States and Europe.  That does not sound like a doomsday is around the corner.

Earlier in the week we started the busy week of earnings off with a ton of financials.  The XLF has been all over the place with many of its components reporting.  Citigroup reported a fantastic quarter earnings.  Wells Fargo missed on its top line by a mile while hitting the earnings estimates.  Other names like Coke, VMWare and EMC all showed magnificent quarterly earnings with VMWare as the big stand out growing earnings like it was 1999.

Highlighting the week was a disappointing earnings release by Apple.  It had all the momentum and hype going into its earnings release and it rolled over giving back over 6%.  Analysts are hearing a different tone for the first time since Steve Jobs passed.  They are seeing major competition for the iPhone now in the Android while still selling over 4 million units in the first 3 days of the new iPhone release.  Lastly in this busy week of earnings, speculation of Yahoo! being bought again has started.  Of course Microsoft is involved but their are other parties included in the purchase now as well.  Personally, I think Microsoft could make more strategic acquisitions, but who am I to say what Steve Ballmer should do. 

Good luck out there and keep listening to those conference calls during this busy week of earnings!





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