The pros showed lots of caution as the markets move deeper into earnings season, suspecting pullbacks after several strong weeks. The earnings of financial companies will be of particular interest this week, but surprises are less likely. When the U.S. economy recovers, it is likely to do so before those of either Japan or Europe, because the U. S. has acted much more swiftly, forcefully, and, one hopes, appropriately.
Doll: If You Haven't Been Buying, You Better Start
BlackRock's Bob Doll said we are now five months into the bottoming process; we have seen the bottom, but we have not solved all our problems, "the banking system and real estate key among them." If you haven't put anything into the market during the bottoming, you've got to buy now, because the bias is to the upside; if you've been buying all along, you don't have to be a hero and jump in deeper. The bears are going to look for bad earnings to bring things down.
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Rally Tampers Buying Urge, mediocre recovery coming
Subodh Kumar said the recent market rally has left him reluctant to invest new money, at least until later in the year. Allen Sinai of Decision Economics said he's seeing some very early signs of recovery, with stimulus policies starting to be felt. Companies and consumers are re-adjusting by saving more, paying down debt, and not taking on credit the way they did before. Six months from now, the slashing and burning will be over, but a "healthy" recovery is not likely soon.
Markets Hang on Financial Earnings This Week
Thinkorswim's Joe Kinahan said earnings are likely to drive the markets this week. All eyes are on the numbers from Goldman Sachs; options traders see the risk on the financials as more to the downside than to the upside, but the banks will trade in a tighter range than many expect.
A Long Way to Go, but America's Getting There First
Goldman Sachs Global Markets Institute president Abby Joseph Cohen says there are clear signs of recovery, but unemployment will remain a problem. Europe and Japan are behind the curve; investors there have been much more reluctant to lower their forecasts. The ECB is a curious case, because while it controls monetary policy, there is no one sovereign government that controls fiscal policy.
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