Sunday, October 30, 2011

Q3 earnings - good, U.S. GDP - reasonable, Supercommittee progress - unknown

After 293 companies in the S&P 500 have reported third quarter earnings, the average growth in revenue is 11% and growth in earnings is 19%. Additionally, third quarter U.S gross domestic product (GDP) was 2.5% - suggesting that recession is averted for now, but some of its sub-components are less clear on its strength. However, there are concerns that the U.S. Congress’ "Super Committee", appointed to determine $1.4 trillion in U.S. budget cuts by late November, is not making progress.

MY TAKE: In an environment of heighted uncertainty, the corporate earnings and GDP results are reassuring. Hopefully, the Super Committee can avoid partisan bickering and provide constructive budgetary guidance. Anything less, from the U.S. Congress, may result in another set of U.S. credit downgrades and more market turbulence.

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