Data from StreetAccount clearly shows that the big upside in preannounced earnings we have seen in previous quarters is slowing dramatically. 


We are now getting into the thick of the 3Q10 earnings season and much rests on continued improvement in corporate earnings.

With all the noise around QE and M&A rumors, it is possible that the market is being less attentive to companies’ financial performance than it has in prior quarters.  While to me it appears there is a disconnect between the top-down Macro headwinds and market sentiment, eventually corporate earnings will reflect the reality of the current economic environment.  Given the run that stocks have had over the past few weeks, a downside disappointment in corporate earnings could have serious ramifications. 


The data provided by Street account showed that the 3Q10 preannouncement season was a quiet one with only 143 revisions compared to the 165 and 169 seen in the 1Q10 and 2Q10, respectively.  The ratio of positive to negative announcements for 3Q10 is at 1.1-to-1.  As is evident in the chart below, 3Q’s current ratio is part of a continuing decline from the peak of 2.9-to-1 seen in 4Q09.


Along with the slowdown in the preannouncement season, we are seeing analysts being to get more cautious on 2011.  According to Bloomberg, estimates for 2011 S&P 500 profit fell to $95.17 last month, from an August high of $96.16, and posted the first quarterly reduction since the three months ended June 2009.  The decline came as the S&P 500 rose 8.8% in September (the biggest advance since 1939).


Howard Penney

Managing Director



Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more

Neurofinance: The Psychology Behind When To Sell A Bull Market

"Most momentum investors stay invested too long, under-reacting and holding tight after truly bad news finally arrives to break the trend," writes MarketPsych's Richard Peterson.

read more

Energy Stocks: Time to Buy the Dip? | $XLE

What the heck is happening in the Energy sector (XLE)? Energy stocks have trailed the S&P 500 by a whopping 15% in 2017. Before you buy the dip, here's what you need to know.

read more

Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more