Monday Outlook: IBM Lift, Sears Drift

The haves and have nots this earnings period could come down to who has the biggest foreign exposure. Look what happened with IBM today. The weak dollar is its friend.

In a preliminary release of its fourth quarter earnings, IBM said quarterly profits rose to $2.80 per share, an increase of 24 percent. Plus, it said revenues jumped to $28.9 billion, an increase of 10 percent--currency accounted for 6 percent of that 10 percent. IBM also said it is well positioned to meet its long term earnings per share objective for 2010.

Its bullish earnings comment is giving a lift to a stock market that was already itching to move higher today. Those comments helped lift tech stocks but may also spread to stocks with large overseas sales, the big beneficiaries of the weak dollar.

Not so good today is a warning from Sears. Sears said same store sales were down 3.5 percent in the holiday period, hurting fourth quarter results. Sears said it had a lower gross margin rate in the nine-week holiday period, ending Jan. 5. Sears blamed weak sales on more competition, the credit crunch and the weak housing market.

The financials continue to be the focus of debate as earnings reports are due this week. CNBC's Charlie Gasparino is reporting that Citi could write-down as much as $24 billion when it reports tomorrow. Citi is also expected to lay off about 20,000 employees. Merrill Lynch, meanwhile, could also take another writedown. And both companies are searching for fresh capital from abroad. So, the debate in the stock market is whether this next round of writedowns will be the bottom for financials.

Andrew Brenner of MF Global says the bond market was moving higher earlier on Gasparino's report on Citi, but he said the IBM report reversed those gains.

The dollar is under fire today and gold is ON fire. The precious metal surged to record levels, above $910 per troy ounce. Platinum also trading to record high prices.

The dollar is off its lows but it slumped to a seven week low against the euro overnight in part on the view that the U.S. will move aggressively on interest rates. Andrew Busch, global foreign exchange strategist at BMO Capital, says though the dollar is moving lower on another concern. Busch, a CNBC contributor, said the dollar is moving lower on a report in the South China Morning Post quoting the economist of Saudi Arabia's National Commercial Bank. The economist said it is time to reconsider the pegging of the riyal to the dollar.

Oil is perking up on geopolitical anxieties. President Bush's comments about Iran threatening world security over the weekend is a factor, as are concerns about Nigeria. Oil was up more than $1 per barrel and was moving toward $94 per barrel.

Questions? Comments?