Forex Marketz Daily Forex News – Fully Markets Update
The global markets and investment world is becoming riskier for “risk assets.”
Last Thursday, the Swiss National Bank (SNB), shocked us when they removed its peg against the euro. This caused the Swiss franc to leap higher and the euro to sink. This caused quite a stir in the Forex world. We also see global economic growth problems as commodities, in particular crude and copper sinking lower and lower. Crude is at a multi-year low.
The United States is one of the only strongholds for global economic security and growth. The Dollar is strong and U.S. Treasury yields are moving lower as people move to a safe haven. The only question is how long can America keep this pace up as the world continues to slow?
This week we will get a number of companies like Halliburton (HAL: NYSE) and McDonald’s (MCD: NYSE) reporting earnings. This will give us our first clue into that very question. As the Dollar soars higher, oil prices plunge, will the bottom line of corporations show a dent? This is one serious concern. We need clarity on this issue regarding oil prices and how it is affecting corporations in America. Declining interest rates and the rise of the Dollar will also affect bottom lines as US exports are now expensive.
Forward Looking Corporate Estimates are not Pretty
The “blended” estimates used to gauge fourth quarter corporate earnings growth is tepid at 0.6 percent. In December, this number was at 1.7 percent, but thanks to banks to large banks who missed earnings numbers, like Citigroup (C: NYSE) and Bank of America (BAC: NYSE), the number has fallen. More companies tend to beat estimates then miss but if the number stands at 0.6 percent then this could be the slowest earnings season since Q3 of 2012. That is when S&P 500 companies had earnings declines of one percent.
Much of this fall off is due to an energy sector that is being beaten up. Oil is in a free fall and exploration and production companies are being battered. If you take these companies out of the equation then the estimated S&P 500 earnings growth is closer to 3.2 percent. Big question, will energy sector losses mean gains for consumer companies?
Consumer are Smarter than Most Think
Consumers are not dumb. They are pretty smart and they know the falloff in oil is not going to last much longer. So they know the savings they are getting from filling up their cars with gasoline is not going to last. This means they are saving more and spending less. They have learned their lesson.
Not everything is gloomy on the corporate front. Many corporations are seeing profits. Labor costs are low and not out of control and they can increase prices a little bit. This means they are benefiting from lower energy costs. Also, the world has not proven to be a big threat to the US economic growth, yet.
