The market showed signs of being out of pain early last week as well, as the huge volatility of the previous couple weeks subsided a bit and market participants appeared to go into a holding pattern awaiting whatever catalyst would be next (Mon and Tue). That all changed Wednesday but surprisingly a lot of things did quite well in the face of a 300-point down day. I never discount the possibility of Janet Yellen wearing a certain necklace one day which would cause some market genius to say, “Wow, that necklace means they’re raising rates!” (or something along those lines), but more or less I expect the next bout of volatility will come as first quarter earnings results begin hitting the wire in mid-April. The earnings season that will go roughly from the second week of April through the third week of May will be an interesting one as it may test my “divergence” thesis … What is my “divergence” thesis, you ask? Read on and find out. Off we go …
My top points of the week, noted with an asterisk (*)
- I expect a wide dispersion of results across individual companies in this coming quarter’s earnings results. Rather than a monolithic “good” quarter (or the opposite), I think you will see a lot of different results from individual companies based on their own operational execution, etc.
- There will be a lot of talk in the coming weeks and months about the impact of a stronger dollar on corporate America, and that talk will be mostly silly.
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