It’s all about the earnings!

Last Friday the Toronto Stock Exchange closed at a new yearly high. The market as a whole has been moving up slowly and steadily. Don’t be surprised to see it float higher this week too. Just keep in mind that sooner or later we will pass through some air pockets.

Since earnings season for Q1 kicked in, there have been few disappointments. There might be a robust recovery out there or the bar might have been lowered, what matters is the end result. Here we are starting another earnings week; I would not be surprised to see a repeat of last week’s performance.

It’s very interesting to see the markets shrug off sovereign debt issues with Greece and ignore Goldman Sachs’s fraud charges almost completely.  Greece isn’t out of the woods yet and there is still some uncertainty on the billions it is asking for. Germany for one isn’t ready to sign a blank check. As it stands, the response can be positive as it can be negative. Even though a default by Greece could threaten the recovery, the investors are simply focused on earnings.

Coming up this week is the Fed meeting and its rate decision to be released on Wednesday at 2.15. This could be a market variable even though the market does not expect a change to the rate for some time yet. It’s the Fed’s statement that will be parsed for any change in the stance regarding the time period for low rates.

Finally, Natural Gas prices seem to have set a bottom at 4$ following a report that the number of drill rigs has fallen with expectations of increased demand this summer from natural gas power plants. I was planning to get back into these stocks by September but it looks like my plan might be disrupted. I will be watching this sector closely, wouldn’t want to miss a rally.

How about you Reader, what do you think of this market?

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  2. Q2 Earnings Glow Fading
  3. Q2 Earnings Parade Begins
  4. Who’s next in the spotlight?
  5. G20 Aftermath: It’s All About The Jobs!