Will Earnings Season Pause the Market Rally?

Last week:   Equity markets rode the wave of a Global Equity rally as the German DAX and London’s FTSE closed at record highs, while Japan’s Nikkei rallied to the highest levels in 15+ years.  In China, the Shanghai composite hit another 52 week high while sporting a 90%+ gain over the last 12 months. China Growth Slows, Drags Down Asia

Whether it is purchasing managers index, statistics or imports and exports, more and more signs point to a tapering of China’s growth. International traders will have plenty to consider this month.

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 China’s E-Commerce Market Is Growing… And Fast

China’s e-commerce market is big. Think $2.2 trillion big.

While the rally in Asia is being fueled by a heavy dose of QE in Japan and expectations of further interest rate cuts from the BPOC in China, there is concern over the sustainability of the near parabolic rally in the Hong Kong Hang Sang market the last week, some of which has spilled over into the mainland.    Trina Solar Announced to Supply 116 MW Modules to Japan’s Largest Solar Power Project

Trina Solar Limited (NYSE: TSL) (“Trina Solar” or the “Company”), a global leader in photovoltaic (“PV”) modules, solutions, and services, today announced it signed a module supply agreement with Toyo Engineering Corporation (“Toyo Engineering”) to supply approximately 116 MW high efficiency modules to the largest solar power project in Japan.

Japan’s Economic Woes Continue: Industrial Output Plunges 3.4% In February

USD/JPY Higher

USD/JPY is trading higher Monday morning at 120.68, up 0.59. Minutes from the Bank of Japan monetary policy meeting were released overnight and has kept dollars buyers active. The BOJ reiterated its monetary policy. Japan’s year-over-year Machine tool order data came out at +5.9 percent. The month-over-month data showed a slight decline.

In the Eurozone, there is no doubt that the QE program embarked upon by the ECB 6 weeks ago is having a positive impact on equity prices, and is being supported by encouraging economic data during the last month.

The rally in US Equities has been slightly less enthusiastic ahead of an earnings season that is widely thought to be the first down quarter for S&P 500 earnings since 2009.  However, it was very noticeable last week that on any significant sell off there were definitely buyers of stock waiting in the wings.

Earnings Season Expectations

This Week Earnings reports for 1Q will get into full swing highlighted by a handful of big banks.  With tepid expectations it will be telling how much patience investors have for flat to down earnings in sectors away from oil and energy.  There is no doubt we’ll hear dozens of references to “the brutal weather” in the Midwest and Northeast, as if it’s “breaking news” that winter months bring snow and cold weather.

We’ll also hear multinationals gripe about the stronger than forecast strength of the US dollar, which should immediately beg the question of whether Corporate Treasures are aware that foreign currency markets are the most liquid financial markets on the planet. The new earnings season ramps up this week.

Traders will welcome the volatility, the $VIX at $13 has muted opportunity recently. Earnings Scheduled For April 13, 2015

Commerce Bancshares, Inc. (NASDAQ: CBSH) is expected to report its Q1 earnings at $0.58 per share on revenue of $265.34 million. Pep Boys – Manny, Moe & Jack (NYSE: PBY) is projected to post its Q4 earnings at $0.03 per share on revenue of $506.80 million.

13 Stocks To Watch As Earnings Season Ramps Up

Equity markets have had a “bad news is good news” approach on occasion toward less than desirable macro data on the economy the last few years.   It will be a challenge to apply the same mindset to individual corporate earnings the next few weeks.

Tim Anderson Managing Director TJM Investments, LLC tanderson@mndpartners.com tjanderson56@gmail.com Twitter:  @TJAnderson1 DISCLAIMER:: NOTICE REGARDING PRIVACY AND CONFIDENTIALITY This e-mail and any attachments thereto is intended only for use by the addressee(s) named herein and may contain legally privileged and/or confidential information. If you are not the intended recipient of this e-mail, you are hereby notified that any dissemination, distribution or copying of this e-mail, and any attachments thereto, is strictly prohibited. If you have received this e-mail in error, please immediately notify me and permanently delete the original and any copy of any e-mail and any printout thereof. E-mail transmission cannot be guaranteed to be secure or error-free. The sender therefore does not accept liability for any errors or omissions in the contents of this message which arise as a result of e-mail transmission. In accordance with SEC Rule 17a-4 and NASD Rule 3010; Emails sent to and from this address may be recorded and are subject to archival, monitoring, review and retrieval by the TJM Compliance Department. TJM and/or its affiliates are a member of FINRA, CBOE, NFA, SEC, and SIPC. TJM’s main office is located at 318 W. Adams 9th Floor, Chicago, IL 60606. For more information about TJM, please contact (312)-432-5100 or fax (312)-432-4499.

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