Will Stock Markets Start Selling Off This Week? Analysts Reduced Earnings Growth Expectations For Q1 2013 (to 0.1% from 2.4%), Northeast Blizzard Hurt Sales, Gas Prices Hit New Historic High, Americans Claim Higher Payroll Taxes Already Affect Their Spending…

A Crack In The Stock Market’s Foundation Is Getting Bigger

Here’s a metric we’ve been following with interest for the last several weeks.

It’s earnings growth expectations, which have been falling on a weekly basis.

Earnings and earnings expectations are arguably the most important drivers of the stock market.

“Since the end of the fourth quarter (December 31), analysts have also reduced earnings growth expectations for Q1 2013 (to 0.1% from 2.4%) and Q2 2013 (to 5.1% from 6.7%),” wrote FactSet’s John Butters in a note published on Friday. “For Q1 2013, all ten sectors have witnessed a decline in estimated earnings growth, led by the Materials (to 2.1% from 7.2%) and Information Technology (to -2.7% from 1.7%) sectors.”

Just last week, the growth expectations 0.5% for Q1 and 5.4% for Q2.



Citi Analyst: Northeast Blizzard Might Hurt Sales of Some Retailers

An Citi Investment analyst said Monday that the blizzard that struck the Northeast over the weekend will likely hurt retailers’ February sales, as the storm sharply reduced traffic.

The storm that slammed into the region between Friday and Saturday with up to 3 feet of snow was blamed for at least 15 deaths in the Northeast and Canada, and brought some of the highest accumulations ever recorded.

Oliver Chen of Citi Investment Research said in a client note that the retailers he covers have, on average, about 16 percent of their stores located in the blizzard-hit region. The analyst said those probably impacted the most include American Eagle Outfitters Inc., Urban Outfitters Inc. and TJX Cos.

Gas prices hit new historic high

Gas prices hit a national average of $3.59 Monday – the highest ever for a Feb. 11. Several factors will continue to drive up costs, but not to last year’s highs, analysts say.

A combination of high crude prices, refinery shutdowns, and early speculation has sent gas prices soaring to seasonal highs earlier than usual this year, with no signs of prices at the pump falling until spring, according to recent estimates.

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Gas prices have climbed every day for the past 25 days, reaching a national average of $3.59 per gallon Monday, the most expensive national average ever for Feb. 11, according to AAA.

Why Gasoline Prices Will Continue Higher


Meat Industry May Shut Down For Weeks Due To U.S. Spending Cuts…(Load Up!!)

* Without USDA inspectors, meat plants would have to close

* Production losses of $10 billion possible

* White House ties budget cuts to everyday life (Meatpackers say USDA can avoid mass shutdowns)


NYT: Americans Feeling the Pinch of Payroll Tax Hike

Though the economy may not have been brought to its knees, some Americans are starting to feel the pinch of higher payroll taxes, and they claim it is already affecting their spending, The New York Times reports.

Now a part of history, the payroll tax break lightened the load of Social Security taxes by 2 percentage points in 2011 and 2012. When it was eliminated as part of the fiscal cliff deal, many economists warned it would have an adverse effect on the economy.

The new higher rate, which went into effect at the beginning of 2013 applies to the first $113,700 of earned income. Economists estimate it will cost the typical American worker about $1,000 a year, according to The Washington Post.


Goodbye Bond Vigilantes, Hello Brent Vigilantes


which makes one wonder what is driving the Brent-WTI spread divergence (aside from fundamentals which we discussed previously) as it seems $100 is desperately defended in WTI and Brent left to wonder. But judging by today’s move – they are starting to lose the battle…



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