Sunday, July 10, 2011

As Earnings Season Begins, It's All about the Forward Outlook

OK – you have heard it all before, investors are concerned about: 1) problems in the U.S. housing market, 2) federal, state and municipal government budgets issues, 3) Eurozone financial bailouts, 4) inflation in developing countries, 5) Middle East and North African political conflicts and 7) supply chain issues related to Japan’s earthquake/tsunami. This week, 2nd quarter earnings season begins with financial results from firms such as Alcoa Inc. (US: AA), Citigroup Inc. (US: C), Google Inc. (US: GOOG), Infosys Technologies Ltd. (India: INFO), JP Morgan Chase & Co (US: JPM), Tata Consultancy Services Ltd (India: TCS) and Yum! Brands Inc. (US: YUM).

MY TAKE
At this time last year, equity markets under stress and the U.S. Federal Reserve responded by turning on the printing press with its QE2 stimulus efforts. Today, with the QE2 process over, the management commentary from hundreds of companies in the coming weeks will be critical components in assessing short and intermediate term economic and investment trends.

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