Tues 2.7.12

To keep expounding on the notion that 4th quarter's earnings season has been less stellar than previous quarters, I note that WSJ has picked up on this and has a graph which states that this earnings season is shaping up to the be the worst since the financial crisis for profit margins and firms beating expectations. Of the 204 companies in the S&P 500 that reported results in January, 60% have beaten estimates, which is well below the 70% that beat expectations in the first 3 quarters of 2011. However, I again must throw some "warm water" on this "cold water" statistic, as companies are continuing to provide solid earnings guidance for 2012, and 4th quarter has historically been a "clean-up" quarter, so as an investor I would look at the whole picture, which says that the economy is starting to rise (albeit slower than we would like) and employment data is moving in the right direction. Lastly, companies balance sheets are as solid as they have ever been, with a substantial amount of cash on their books, so although it will be bumpy, look for the trends to continue to be favorable.