Tag Archives: Nicholas Colas

Business, Finance, Occupation & Industry

Wall Street This Week: All Eyes on Earnings

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By Reuters

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By Rodrigo Campos

The stock market‘s robust rally was slowing even before Friday’s jobs report, but the red flag sent up by the weak payrolls data makes the path to more gains less secure.

It means the bulls will have to look to earnings for a way to keep the rally going. The S&P 500 hit an all-time closing high on Tuesday, but lately defensive stocks have been leading the charge, and notable growth indexes are slipping.

This rotation has many thinking the long-awaited market correction is nigh. A 3 percent decline in theRussell 2000 index last week seemed to be a confirmation of the trend.

“Momentum I think has been slowing a bit, and it would be interesting to see if this is just a one-session sell-off,” Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, said about Friday’s decline.

In the first quarter, the benchmark’s healthcare index added 15.2 percent and utilities gained 11.8 percent, besting the broad S&P 500’s 10 percent gain.

The transition into defensive stocks may respond to investors’ taking into account the effect of higher payroll taxes this year and the $85 billion in government spending cuts that started to trickle at the beginning of the year.

The shift is “a rotation into sectors less affected by a short-term slowdown in the consumer,” said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

Earnings Hold the Key

Earnings season starts in earnest this week, with the highlight coming from JPMorgan Chase & Co and Wells Fargo & Co on Friday. Details on Wells Fargo‘s earnings will be dissected for clues on the health of the housing market.

Overall, S&P 500 earnings are expected to have risen 1.5 percent last quarter, down from a 4.3 percent gain expected at the start of the year, according to Thomson Reuters data.

Investors “are really waiting for the earnings season on balance to disappoint,” Zaro said.

Companies have caught up on the lowered expectations, and negative outlooks have been predominant ahead of earnings season. In fact, the negative-to-positive guidance ratio from S&P 500 companies is at its highest since the third quarter of 2001, according to Thomson Reuters data.

At 4.7, the ratio is the sixth-highest among 69 readings dating to 1996.

“Companies understand that since the economy is weak there’s no reason to be a hero and give guidance you can’t beat,” said Nicholas Colas, chief market strategist at the ConvergEx Group in New York.

F5 Networks was the latest and one of the most dramatic examples of lowered earnings expectations. The network equipment maker partly blamed lower government sales for its profit warning late on Thursday, which erased almost a fifth of its market value on Friday.

In past quarters, revenue beats have taken the focus off the …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

As Cyprus' Woes Deepen, Interest in Bitcoin Soars

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By David Schepp

Bitcoin and Cyprus Getty Images | Steve Jurvetson, Flickr.com

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Getty Images | Steve Jurvetson, Flickr.com
The recent decision by the government of Cyprus to shut down the island’s banks and limit the amount depositors can withdraw from their accounts reveals just how real the country’s financial woes are. Yet even as Cypriots are most keen to get their hands on cold, hard cash, some investors are placing their bets on the virtual currency known as bitcoin.

Bitcoin in some senses is a financial island, operating at a safe distance from the traditional banking system.

Used primarily to buy goods and services online, bitcoin is a recent invention, created just four years ago by an Internet hacker (or group of hackers) known as Satoshi Nakamoto. As Bloomberg BusinessWeek notes, even by Web standards, bitcoin “is a strange and supergeeky phenomenon.”

Bitcoins operate on a network that somewhat resembles a typical exchange on the capital markets. As CNBC reports, buyers can exchange national currencies for bitcoins and use them wherever they are accepted, and sellers can exchange bitcoins for traditional national currencies.

As the financial crisis has deepened in Cyprus, and holders of euros and Russian rubles become increasingly anxious, the value of the bitcoin has surged. As ABC News reports, the exchange rate for 1 bitcoin has soared to nearly $80 from $40 just two weeks ago.

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Bitcoin is “clearly having a breakthrough moment here, and a deeply surprising one given its novelty and nascent infrastructure,” Nicholas Colas, chief market strategist at ConvergEx Group, told the network.

As DailyFinance reported last year, bitcoin in some senses is a financial island, operating at a safe distance from the traditional banking system. It’s neither controlled by central banks nor governments, and thus not vulnerable to larger-scale shifts like changing interest rates, nor the rampant inflation of countries in decline.

It’s that isolation from geopolitical turmoil that has been its true selling point for people in Europe.

How does it work? As Motley Fool reports, instead of relying on a central bank or other regulatory body, bitcoin transactions are verified through peer-to-peer interactions. If a user sends bitcoins to another user’s “wallet” file, that transaction is verified through other users, and is written into a collective transaction log. Transactions are easy, and fees for transfers are minimal.

As with any currency, however, there are risks, including volatile swings in the value of bitcoin, which makes it difficult for businesses to accept them with any degree of confidence.

Currency analysts, however, are at least willing to give bitcoin the benefit of the doubt as a legitimate trading vehicle as situations like Cyprus continue to crop up.

As Christopher Vecchio, currency analyst at DailyFX, told CNBC. “Right now, it seems safe, [though] it wouldn’t be my preferred vehicle to trade money because it’s unregulated.”

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Source: FULL ARTICLE at DailyFinance