Goldman Sachs(GS) reported their earning $4.93 far ahead than estimated $3.53. Their Equities and FICC generated revenues $3.18B and $6.8B respectively amid a better stage set in trading environments. Following GS, JPMorgan Chase which bought Bear Sterns and Washington Mutual(WaMu) reported good results and these events helped DOW to climb 937.14 points from 8157.10 to 9093.24 in a matter of 10 business days. Is the US economy on its track to rebound?
No doubt the economy is showing signs of stabilizing and DOW has recovered from 6600 points in Mar'09 to 9100 in Jul'09 and many of the banks have returned their share of Stimulus money back to the government, but still Obama led government is concerned about how to get the economy on track, generate more employment, keep unemployment as below as possible and get back the consumer spending. US' peer Spain is facing 17.7% unemployment and it could go upto 22-24% by mid next year if the industries will keep on slashing jobs at the same rate and economy does not show any signs of improvement.A bloomberg article shows how bad situation is there in Spain and it has ~30% unemployment population among euro region. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOBGPyetNGIg.
Obama led administration is putting every effort to fix the economy related issues, but still the economy is not showing any signs of growth as the unemployment is around 10% and none of the industries are showing any signs of hiring, putting pressure on government on how to tackle the problems the economy is facing, whether one more stimulus required to boost the consumer spending? Since consumer spending is core to get the economy on track. But current results from Microsoft and Amazon are showing dizziness how much time it will take to get on track, how the consumer spending and the companies are cutting their expenses. MS missed its revenue and net profit projections and for the first time since going public and it reported negative revenue growth. The same way Amazon missed its revenue and net profit projections even though their Kindle 2 was a big success in digital e-Book market surpassing Kindle 1 sales. And couple of companies declared their negative results amid less consumer spending indicates recession might prolong.
World leaders at the currently concluded G20 summit are concerned about how the get back the consumer spending and generate more number of jobs, and world reserve currency as USDollar is showing its weakness and most of countries who have their foreign exchange in US Dollar are seeing their values plummeting.
So seeing a rosier picture for couple of days in DOW, we can expect the market to correct to some extent and till the economy is not showing firm signs it would trade range bound 8500-9000 points.
I will keep on posting market views as and when getting some time.
Sunday, July 26, 2009
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