The Day Ahead: What Mother Earth Is Telling Investors

Underneath the headlines of "financial death by fiscal cliff," and consumers fretting that they can't charge for a bundle of plastic quick enough, is good ol' Mother Earth -- the blue, brown, and white mass comprising particles that make up people and "stuff." (I'm no chemist, so tread easy with the molecular questions here.)

For myself, as an interested investor, tapping into the brainwaves of Mother Earth is very instrumental in achieving success. Global stimulus actions by monetary and fiscal authorities will tend to jam the frequencies of what she is trying to share on the ground. So I humbly suggest, on this second day of my "chill on the sidelines" market call, to have a chat with Mother Earth.

Earnings misses and warnings are still irrelevant to the broader market, but sonny...

Start recognizing an undercurrent of negativity could be building beneath the surface of calm waters. I count at least five companies that have yelled "fire" in a crowded, comfortable room, via earnings misses and warnings: FedEx (FDX), Intel (INTC), Texas Instruments (TXN), Norfolk Southern (NSC) and Bed Bath & Beyond (BBBY). If you're aware of others -- and I hope you do, as this ain't no game, man, it's life -- please do add to the list.

In view of this batch, Mother Earth has offered these talking points reserved for public settings.

1. There is severe disconnect between a European Union plan that has not even been put into functional action yet, and central demand trends in Southern Europe and in what's perceived as the safer Northern Europe. That disconnect means greater risk to multinational valuations and estimates.
2. In an economy that is notching downward revisions to disappointing headline employment figures, a supposed "best in show" retailer such as Bed Bath & Beyond will be forced to mail more coupons in order to bring in traffic. Further, there is no guarantee that rising home values will get customers to buy pricier merchandise -- a shift to lower-margin items is in full effect.
3. When a company such as Norfolk Southern states volumes are declining in "certain markets," it captures the essence of the bear argument -- as if its massive chop to third-quarter earnings expectations weren't disturbing in and of itself. Note that this earnings haircut will be tougher to swallow than was the original FedEx warning weeks ago.

A new theme is potentially sprouting. Look alive.

At first -- that is, before the Federal Reserve's announcement of a third round of quantitative easing -- clear attention was being paid to the benefits of central-bank action. Then, on Fed day, that sentiment reached fever-pitch levels. Now we're seeing the beginnings of a modest shift toward determining why the Fed and its international counterparts are throwing the book at fixing what the fiscal side should also be helping to address. What nitty-gritty data are these privileged folks seeing, anyway?

Specific to the Fed's actions, the hawks are starting to crow about inflation expectations and knock-on effects. This is unscientific, but their comments -- as if to quietly tell gold investors they are correctly assessing the future -- seem to constitute the loudest opposition thus far in the Bernanke-led Fed. None of this is to freak you out completely. They're just things I am seeing that I feel I must articulate.

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