Signs of Economic Life Real?

That’s the biggest question for all investors is what’s going to happen with the economy going into 2012?

Dan Denbow: And that’s the biggest question for all investors is what’s going to happen with the economy going into 2012? Yeah, you’d like to think that we’re off and running and that things are going to look good, but there’s always questions out there. We came in with GDP on Friday that was 2.8%, which looked good, but actually was a disappointment ’cause it was 20 basis points above what expectations were, but it was an uptick from what we’d seen earlier in 2011.

The Fed this week came out and said they’re going to keep interest rates lower for longer. Kind of a QE2.5. They’re not printing more money, but they are remaining accommodative, and they’re doing that because the outlook for the growth is slower than they would like. It’s below trend.

They did expect that you might see some improvement in employment from that, but the growth outlook is not as good. So therefore, they promise to keep rates lower through the end of 2014.

Corporate Earnings — What’s the Driving Factor and Surprises?

Well, earnings this week, you know, remained a big story. We’re through about a third of the S&P 500 reporting. Roughly, 60% of the companies reported positive surprises. And we did have two good reports this week out of Apple and Caterpillar that helped to buoy the market. But overall, the earnings report is mixed, and that leads to questions about, you know, where it’s going, going forward.

Sixty percent of the companies reported upside surprises. That is down from the prior three quarters of 2011 where the earning surprises were in the 70% range. Part of that is coming from — is leading to concerns about margins. Do we have enough sales growth to continue to generate good earnings growth going forward? And it comes back to the outlook of what’s the economic growth for 2012. It still seems to be a mixed report so far.

Snapshots of Next Week

Next week’s going to have several things everybody’s going to be focusing on. We’re going to have a couple key economic reports. We do have personal income and spending. It’s going to give us a look at the consumer for next year. Coming up, also, we have consumer confidence midweek that’s going to give us another look at the consumer. But the big number’s going to be labor on Friday and looking at what’s happening to the unemployment and how that’s going to impact the market — or the economic growth going forward.

We’ll continue to have earnings reports from the S&P, and that will lead to another picture of what’s happening or a snapshot of what’s happening. And then we’re continuing to watch Europe, and can we get any resolution on the Greek debt crisis? And can they get any resolution on solving some of the other problems going on with their debt problems?

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