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Page One: Markets Navigate Through
Year-End Volatility
There is much to cheer
about this holiday season. Both the S&P 500 and
the Dow gained over 10% year-to-date while the Nasdaq
is posting returns of over 15%. U.S. equity markets
by far outpaced the major indices of other developed
markets. Underscoring the performance is equity
fundamentals that include earnings growth, attractive
valuations, dividend yields, and a corporate sector
flush with cash. While the year still has a few
trading days left, the new year will do little to
alter this picture.
That's not to say 2011 won't have its share of excitement.
Rest assured market volatility will remain -- the
European fiscal crisis is nowhere near resolution
and the Chinese government-instituted slowdown will
continue. Those are just the "knowns".
The volatility bell is ringing today two days after
the S&P 500 reached levels not seen since September
2008.
First off, market participants are digesting news
out of FedEx (FDX) of a $0.15 per share miss. We'd
point to the fact that the shortfall was largely
attributed to higher compensation and benefits costs
due to the company restarting programs curtailed
during the recession, which in turn negatively impacted
margins.
Read
the full Page One here.
Ahead of the Curve:
General Motors
Still a Concern
Much of the media
focus on GM's IPO tends to paint it as the successful
re-launch of the icon of American industry and an
example of how the government bailout was successful.
This rosy picture ignores the fact that the company's
new business direction emphasizes GM's weaknesses
instead of its strengths, overlooks the $27 billion
liability in unfunded pensions, and ignores the
fact that the Treasury's sale of their stock is
actually occurring at a loss. If anything, the new
GM has become even more of an icon of the problems
facing the United States, not a shining example
of solving those problems.
Read the full Ahead of the
Curve here.
The Big Picture:
The Earnings Slowdown That Isn't So Slow
Given that we are more than two-thirds of the way
through the fourth quarter, it may surprise some
readers to know that we still haven't reached the
end of the third quarter earnings reporting period
-- not in an absolute sense anyway.
For all intents and purposes, the stock market has
moved past the third quarter earnings reports even
though six companies in the S&P 500 still haven't
reported their results for the October quarter.
What is acknowledged today is that a plethora of
positive surprises were produced in the third quarter
reporting period.
Read the full Big Picture here.
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Dec 15, 2010 – NPR.org - Economist Jeff Rosen provides
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