The vend action on Tuesday is telling us that an awful lot of bad news has been priced into the market.
And it just keeps on. Stocks are up in Europe and the U.S….on bad news.
The big worry now is earnings. Overnight, Samsung said fourth quarter operating profit discretion decline 29 percent, to 10.8 trillion won ($9.7 billion), far less than the 13.8 trillion won expected by analysts. The intention, according to Samsung: “Amid mounting macro uncertainties, overall earnings decreased sharply q-q due to: 1) lackluster want in the memory business; and 2) intensifying competition in the smartphone business.”
This indicates that the Apple announcement wear week warning of lower guidance for the fiscal first quarter was not just a one-off. Samsung is a truly diversified far-reaching company. One-third of its revenue comes from the Americas (United States and Latin America), about 20 percent from Europe, 13 percent from Korea and merely 15 percent from China.
The only good news is the market has already anticipated this. The company’s allowances are down more than 10 percent since November and more than 25 percent since carry on May.
Still, this follows on similar comments from Micron and Federal Express.
The savior for the markets may be that a lot of bad info has already been priced in. Take another example: There are more signs of weakness in Europe, with German industrial moving picture numbers soft.
Still, look at what the markets have been doing:
Equity recovery: From Dec. 3 to the fundament on Dec. 24, the Dow Jones Industrial Average dropped 4,000 points, but it has now recovered roughly 1,800 (40 percent) of that go down.
Treasury yields rising: 10-year yields are up 14 basis points since bottoming at 2.55 percent on Jan. 3; and the 2-year produce is up 17 basis points since bottoming at 2.37 percent on the same day
Volatility in steady decline: The VIX topped out at 36 on Dec. 24 and flagged seven of the nine following sessions. It is now at 20.8, a 44 percent decline in nine days.
Dollar lower: The Dollar Typography fist has been in steady decline for three weeks, down 2 percent.