Why are we held hostage again? Are our earnings outlook of some of the US’s best companies really that bad? Or is the fear/contagion worries in Europe so large that it will take the US the BRICs and everyone else down. I guess the correct answer is price is truth…
Don’t get me wrong there are many issues that plague us here in the US, but nothing like 2008. Companies have cash, they are no longer as levered as they once were, and they are waiting for an opportunity to pounce on this market and buy other companies, they are also waiting for a repatriation tax bill to pass. Companies are hoarding cash because there is no where to put it. But I digress. Europe is the problem at hand, god just let Greece default, what are they? a bunch of lazy ppl who want high wages and 35 hour work weeks? Oh wait am i talking about our nation or theirs? Darn it i get confused. Come on, let them go off on their own, let the IMF go save them, we can careless about Greece they bring nothing to the table.
What we do care about on the other hand are Spain and Italy, 20% UE in Spain for Gen Y and Gen X, seems like our occupy wall streeters here who aren’t willing to take any job. But guess what a job is a job, suck it up so what if you went to college and got a degree, if there are no jobs u got to start somewhere. Italy, i don’t even know where to start, their bonds are getting out of control. And all in all the country itself means to much to let fail. So we should not focus on Greece but Italy and Spain, and i believe that is where in lies the problems.
As we are once again held hostage by the PIIGS, we have to focus on a couple things. This puts us back in the August – October season.
Watch these sectors – OIH, XME, XLE, XLI, XLF, XLK, and the XOP.
These are the ETF’s that are really tied to growth.
OIH, XLE and XOP are all energy and oil stocks. If we are really going into a recession you think there will be $100 dollar oil? I doubt it, no once can afford it it is all based on supply and demand, but so far these earnings in this sector havent’ been that terrible, yes they were tough but not recession like.
XLF – Financials it all hinges on this sector, but earnings here also not so bad, i know the banks have been thinking and talking about PIIGS exposure forever now at least 20 months. Most of them are protected if they were smart and earnings last quarter showed that most of them were.
XLI – names in this sector all reported pretty good earnings nothing to not here, except full speed ahead look at CATs earnings they are still building out. The trucking sector all moving forward.
XLK – Tech, tech is based on growth they need people to buy their new technologies and this sector has been carrying us forward. I would watch this sector.
I just wanted to add a few more like the FXE (Euro) and the UUP (the dollar), TLT/TBT (bonds). We are in a flowing market. one that goes up and down together. But watch the larger markets, bond and currency. Should be a big tell.
If you have any questions or comments please feel free to do so, i would love to hear back from the community.
-Benjur
