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What the Pros Say:  Tranquilizing the Bull

Second-day comments on the numbers from Goldman Sachs were significantly less enthusiastic, with fresh questions about the integrity of the stress tests, new worries about runs on banks that scored low on the stress tests. One pro added a new letter to the recession alphabet; others were more optimistic, but still wary about the financials, and suspicious that the market is overbought and ready for some profit-taking.

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Up? Down? Some of both? Looks like a bottom

Bob Brusca of Fact and Opinion Economics said he expects to see first-quarter retail-sales gains, when the revisions are made (the most recent observation, he said, is the most closely watched, but the least reliable), and believes the economy is still on a recovery path. Rob Morgan of Clermont Wealth Strategies said he's underweight the consumer sector because recovery will be a long process. He was encouraged by Intel's observation that the PC market appears to be stabilizing.

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Expectations too high; market brought low

Sharmac Capital's Jason Roney blamed Tuesday's sell-off on investors' overly-high exepectations about earnings. As the bank earnings are received and digested, their stock gains will be capped, as their earnings have been capped by foreclosures and other credit problems. Transparency is a tricky issue; investors are demanding it, but it could threaten runs on the banks that don't get top grades in the stress tests.

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Inspiration from the financials? Can't bank on it yet

MF Global's John Brady also said bank earnings will be in the foreground this earnings season, with Goldman Sachs' numbers impressive, but questions being asked about the accounting techniques used. How the credit markets respond to the bank earnings will be the key. After the advances of the last four or five weeks, traders will be asking how much of the good news is now already baked in, and whether "it's time to take a few chips off the table." A problem is banks' current tendency to keep excess reserves and overnight reserves parked at the Fed instead of lending money in the unsecured markets.

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No green shoots, just brown stalks, and it all looks like a W

When people talk about recessions in terms of letters of the alphabet, this recession is starting to look like a W, according to Art Cashin of UBS. The market clearly got overbought, and we're going to see new complications this week with options expiring. Even when things turn up, there will probably not be a new bull market. The credit market may be the truest indicator of where things are going, and that's unfortunate, because instead of the hoped-for "green shoots," it's showing only brown stalks.