Is The Market Ignoring Bad News?

Careful here: the market is showing signs of ignoring bad news (CEOs are consistently talking down expectations) and jumping all over any glimmer of good news.

If this continues, the bear playbook—which calls for stocks to be pressured in April and May—may evaporate, and we could have quite a melt-up.

Futures popped about 20 points at 8 AM ET when Wells Fargounexpectedly announced that it was anticipating earnings of $0.55 for the quarter, twice the consensus estimates of $0.23. Revenues of about $20 billion are also above estimates of $18.98 billion.

They sounded all the right notes: business momentum is strong, extending significant credit to U.S. taxpayers, mortgage applications up 64 percent, strong operating results at legacy Wachovia.

Cynics say, duh! Of course they're profitable, they're borrowing money at 0 PERCENT INTEREST FROM THE GOVERNMENT and lending it out to customers at five times that!

Wells Fargo up 32 percent, while B of A, US Bancorp, SunTrust and others up double-digits pre-open.


1) Japanese shares are at a 3-month high as the Japanese government is proposing another stimulus plan, this one $150 billion, more than was originally discussed.

2) Wal-Martwas a head-scratcher: March comp store sales up 1.4 percent, below expectations of 3.2 percent, but guidance is "toward the high end of the range" of $0.72-$0.76 which they had previously provided, with a Street estimate of $0.76.

Bottom line: Wal-Mart has a February-April earnings calendar, so they are clearly confident that they can make up in April, with Easter this weekend, whatever disappointment they experienced in March.

Elsewhere, Costcois a bit weak, BJswas down, but if you back out downward gas prices, comps were up 8 percent. Same old same old for apparel (soft), department stores still weak (Macy's down 9 percent, worse than 8 percent down expected).

3) Confounding many, the copper rally continues, up almost 50 percent from the recent February lows.

4) Kuwaiti newspaper report that a Kuwaiti consortium was bidding $21 for Textron...there has been considerable speculation that Textron would be a takeover had rallied earlier in the week

5) Another REIT is raising money: Equity One selling 4 million shares of common stock (about $56 million), one day after Prologis raised about $1 billion. Remember the game: raise equity to pay down debt. Others, including Kimco, AMB, & Simon Property, have also raised equity recently.




Questions? Comments?