Earnings Reports...

Today's numerous earning reports  had one thing in common, many corporations reported higher or meet the street earnings, but drop offs in revenues.  Google might have been the only one reporting better revenues, but lower earnings.  Significant that IBM and Microsoft reported lower revenues and Intel barely beat revenues tells me that the economy is still quite soft. If the economy was accelerating you would see much better revenues instead of lower or dead progress in sales from these technology firms who would see gains from people and businesses buying new machines and add ons for new employees. Again many firms reported continuing expense cuts, which means they are buoying stock prices with telling investors they will hold up earnings with cuts.  No one ever got rich cutting staff and expenses. 

Not sure what to make of GOOG, which would be a leading sign of economic growth. They had better revenues and lousy earnings. Their costs are increasing without any accompanying improvement in profits and that could either be lousy financial management or lousy expense controls. The stock is getting punished for the earnings miss.  I do love to listen to the talking heads who know little, but want you to think they know exactly what is going on. Wish I was so smart. 

As noted earlier I keep a close look on SCCO for expected improvement in the economy and the stock has moved up from $30 to now about $35.  If it stays there that could be a sign of real economic growth, but only time will tell as most of the movement so far is anticipated improvement in the economy. We remain hesitant to commit new capital currently as we still are not convinced of the up tick in the economy. Employment reports, while positive, now have so many fudges, adjustments, and weightings no one with any sense trusts them. We do not believe it is some plot by Obama to make his reelection prospects improve, we believe government reports have become like all government totally unreliable short term and only moderately ok long term.  Reports have been prettied up to help reelection for all of Washington, now just the President. 

The only places we would consider new money would be ERF as we suggested yesterday and once again the agency reits. Maybe we will miss part of any early upturn, but so be it, we would rather be right than sorry.