That Apple top call doesn’t seem so far-fetched now that the blue chips just took their biggest beating in five months, does it? Or is Tuesday’s carnage just another opportunity for the dip buyers who have been getting fat on nearly every market pullback this past year?
It’s beginning to feel different to Michael O’Rourke of Jones Trading.
“We are starting to believe that the lack of sustained headway in the past few months is a sign that the tipping point is imminent,” he said. “What continues to remain lost in all the headlines is how serious the earnings situation has deteriorated.”
With all that Greek noise and the Rattle and Hum of Apple, there hasn’t been much room to stress over earnings season. Now that 98% of earnings are in, O’Rourke kicked around some numbers, and they’re not pretty. While estimates for the first two quarters of 2015 have turned negative, fourth-quarter growth is still slated to be 20%. Could that possibly hold?
“That seems unlikely,” he said. “If the market begins to acknowledge that earnings growth will be negative for 2015, it could serve as a negative tipping point.”
Sharing center stage with the turbulent equities action is the irrepressible advance of the U.S. dollar and the fear it’s striking — or should be striking — in the hearts of U.S. investors. With the dollar at a 12-year high against the euro EURUSD, -0.77% and with parity looming somewhere over the Aegean, Corporate America could be in for some pain overseas.
Erik Swarts of the Market Anthropology went with the nautical theme when he launched into his thoughts on what’s going on in currency markets.
“It’s been an everlasting red sunrise on the decks of those participants looking to navigate the narrows of the lost reflationary straits,” he said. Red sky at morning?
While Swarts believes that currencies are ripe “for a significant reversal of trends,” Jeff Gundlach says investors should seek refuge with the crowd on the bull side of the dollar (more on that below).
Key market gauges
There’s a rebound in the works this morning. Futures on the Dow Jones Industrial Average YMH5, +0.25% and the S&P 500 ESH5, +0.41% are showing signs of life after yesterday’s tumble. Sellers generally kept a lid on Asia markets ADOW, -0.66% though the Nikkei NIK, +0.31% edged up. Europe SXXP, +1.17% is starting out nicely. Crude CLJ5, +0.52% is up almost 2% but can’t seem to retake $50 a barrel. Gold GCJ5, -0.33% is nudging higher.
