This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Day Ahead: Don't Fear the Unknown

What? You thought this was to be another quantitative-easing rundown gleaned from combing four years of Helicopter Ben comments and random YouTube videos? Nah -- been there, done that (for most of August). At least for today, I want to expand upon a couple hints I dropped Monday regarding third-quarter earnings season. Sure, everywhere you turn there is talk of QE-associated tail risks, mouth risks, hoof risks and the like. But a very empty bucket is out in the open labeled "Corporate Fundamentals Now." There is this earnings recession that I have outlined recently, and the concept of leaky profit margins, but I want to tie it all together in order to maximize your preparedness.

The reality, as I see it, is that the market is headed for a series of judgment days during which investors -- both of the deep-pocketed variety and the retail Johnny-come-latelies -- will have to make a choice. They'll all have to decide whether significantly accommodative global monetary policy, plus China infrastructure spending, are valid enough arguments to further expand price-to-earnings multiples on decelerating earnings growth and fiscal-cliff threats (though, hello, there is no real demand in China to be quantified just yet). Then, investors will have to square their decisions with sell-side estimate modeling for a revival in profit growth by the fourth quarter -- the underpinning of fresh upward adjustments to strategists' year-end S&P 500 value targets.

On the eve of Texas Instruments' (TXN - Get Report) mid-quarter update, and a W.W. Grainger's (GWW - Get Report) preview later in the week, a battle must be brought to our attention -- the optimistic, for W.W. Grainger, vs. Texas Instruments, with sentiment that's probably-not-sufficiently-realistic. The problem is that optimism on W.W. Grainger could really provide a shock to the bulls should the company in fact warn. It could cause them to question that "all is fine and dandy" management approach, employed by others in Corporate America back in the second quarter.

On the other hand, if a Texas Instruments sounds incrementally more cautious on top of already tepid comments and guidance, that will obviously be no good, and it could trigger the bears to become more bearish and suck in some new members. In the end, we would have two additional early-inning third-quarter warnings -- ones that are congruent with what FedEx (FDX) and Intel (INTC) shared -- just as we move beyond easing monetary-policy events.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free

Markets

Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs