Varying earnings reports have the market seesawing during this reporting season. While most companies that have released results have beat expectations (albeit lowered ones) from Wall Street, forward looking guidance has left much to be desired. With the job market showing little signs of life, and housing still depressed, consumers aren’t ready to open their pocketbooks just yet. Yesterday’s consumer sentiment reading of 50.4, below expectations of 51 and the lowest in five months, intimated as much.

Many of the poorer company outlooks have centered on diminished consumer spending. However, some areas of the market that you’d expect to be more resilient, like healthcare, haven’t exactly been burning up the track either. The reports out of the sector have been mixed, including those represented in the portfolio. In terms of drug use, the second largest pharmacy benefits manager and FundFinds portfolio member Medco Health Solutions (MHS), noted in its earnings call last week that they expect a slower uptake of generic drugs in 2011, than originally forecast. We weren’t too surprised by this admission, as the biggest drugs to go off patent (including this country’s top selling drug in Pfizer’s Lipitor) don’t become available for generic replication until later in 2011.Read more...

Short-Term Key: Neutral Long-Term Key: -24.9 (Neutral)|

I have a friend who is one of the brightest financial analysts I know. He's made a number of brilliant calls over the years, including anticipating the housing collapse as early as 2006 along with many of the problems that have since plagued the euro. I say this because I want you to know that one of the best and brightest does think that chaos is very close at hand.

Lately, he's been predicting the imminent disintegration of the European Monetary Union, the end of the euro as Europe's common currency, and its devastating impact on U.S. stocks. But as much as I respect my friend's opinion on this matter, I have to disagree with him on the matter of timing. I think we have a few years before the euro disappears.

Today’s action (it's mid afternoon as I write this) makes an interesting comment on the issue. The euro has dropped about 1.5 cents in the past few hours, which is a huge decline compared to its historical volatility. Yet U.S. stock prices are little changed, while most commodities are higher.

That's a pretty good sign that further euro weakness may not lead to a huge economic calamity. It's a change from the past few weeks when stock prices and commodities have generally moved in lock step with the euro, and it suggests that the market may tolerate a devalued euro.

As we said last week, a lower euro may help the European economy by making its exports cheaper, which in turn may postpone the eventual end to the common currency.Read more...

The earnings season excitement continues, with companies largely beating Wall Street estimates. Our recommendations have been no exception, so far. However, besting estimates doesn’t necessarily mean that a stock will rally – and this quarter we’ve seen many companies report impressive results for the period, only to see the stock fall in the subsequent market session.

One such example is cell phone chip-maker and Growth Portfolio member Qualcomm (QCOM), whose stock has been on a rollercoaster ride since the company’s last quarterly report in January. In that instance, the company reported a solid quarter, but its guidance (based on weaker demand from Europe), left something to be desired in the eyes of analysts. We agreed, but saw the short-term weakness in the stock as a buying opportunity. A couple months later, the company revised its guidance – essentially back to its original forecast – based on better than expected demand from its developed economy markets. The stock, as you might expect, gapped up.Read more...