If you go by the title, "Recession to Recovery” of what is highlighted as an important economic address by the President and get nothing more than old rhetoric, including a sense of distaste for Wall Street. What do you get??. Nothing but disappointment is the answer!. The markets held on after the surprisingly bad eco’ data, but lost all it’s will during/ after the address. Once again, a D.C cloud rained on the market.
Finally, we got some headwinds headlines outweighing all the tailwinds. We now have to consider that Monday's highs (864) is the short term top as we didn`t top Feb SPX870`s levels!. If drifting lower is the case in the 2nd half of April, it would set up for a better May -June as we get out of this overbought rally. Watching 833 now as very short term support.
Equities,
Financials deteriorated throughout the day; SPX financial index closed off more than 7%, big wave of profit taking following a huge surge in financials (as of Mon night, the SPX financial index was up 85% since bottoming on 3/6). Yesterday, we said the bar set by GS might be too high for others coming up.
WFC and GS both reported strong earnings & expectations now are very high; traders worry it will
be tougher to surprise financial investors at this point. Red flags in the numbers, we 've pointed out as all earnigs are not great. A bunch of the regionals have been weaker (CBSH was dwn 15% today after earnings, SIVB and SUSQ have both issued large profit warnings for the Q).
GS became the first major financial firm to raise common equity from investors outside of the US Treasury (GS priced 40.65MM shrs @ $123. While the GS pricing had been telegraphed in the press for weeks, the fact a financial was able to come to market should be taken as a positive, (recall Bernanke in his 60 Min interview a few weeks back had said one of the things he was looking for to confirm a recovery was financial firms raising private equity)
Watch those credit trust numbers tomorrow, if AXP is above 10%, it's a short idea again.
AMC,
INTC - revs pretty inline; EPS much better, but they get a lot of help from tax rate, lower
charges, lower investment losses; June rev guidance flat probably a disappointment.