Chris Lau - Seeking Alpha

Monday, April 13, 2009

Slow Recovery



The chart above is illustrating the severity of the current earnings contraction in comparison to earnings betwen 1936 - 2006. It could also infer that a slow recovery pattern might take place, similar to the past. It would take at least two years before earnings stopped shrinking.

A more likely possibility could be that company earnings recover as quickly as it declined, due to the extreme and decisive actions taken by the government.

This does not inherently suggest that a prolonged recovery is sustainable.

(Still) Keep Your Eye on the Ball

Highlights From Matt Blackman's Newsletter:
  • 3-month London Interbank Offered Rate (LIBOR*) slipped to 1.13125% (from 1.16094% last week and 1.22% two weeks ago). This compares to LIBOR 52-week high of 4.81875% last October. [Remember: a wider spread means that banks are less willing to lend to each other]
  • Market Volatility Index (VIX) dropped to levels not seen since September 2008 as it fell to end the week at 36.53. It shows that investors are getting more complacent about stock values.
  • Earnings Digest is no longer published by either or the Wall Street Journal Print Edition [What the?!!! ...]
Other Points:
  • Still bullish on oil
  • Gold may correct lower