Earnings season has finally begun, with Alcoa leading the way. They produced a major loss yesterday as expected. The question going forward is whether we will see any upside surprises. If we do, that might support stocks. I am not expecting it, but it would be a pleasant surprise. On the other hand, all indications suggest that banks will have major writedowns. UBS, Deutsche Bank, RBS and Citibank are a few of the names I have heard expected to show major losses or writedowns in Q4.
One should note that sovereign debt has come under pressure with S&P putting a number of countries on watch for ratings downgrade. This should mean that yield spreads in sovereign debt should widen, particularly within the EU. But, given the weak economy and quantitative easing by central banks, excess liquidity may support continued low rates across the board.
Below are a number of links relating to these topics and more. My favourite is about traders with long ring fingers. Check out the link on Tweetbacks. I have recently added twitter and tweetbacks to my site. You can access my twitter profile here as another way to keep up-to-date with the news flow.
Russian gas to Europe ‘blocked’ – BBC News
Spineless in Washington: Obama and Guantánamo Bay – Willem Buiter’s Maverecon
Parsing Rubin: The Exit Memo – DealBook Blog – NYTimes.com
Citi May Book $10 Billion Gain on Morgan Stanley Deal – Bloomberg.com
Alcoa Reports First Loss in Six Years as Demand Falls – Bloomberg.com
Royal Bank of Scotland May Face LyondellBasell Losses – Bloomberg.com
S&P threatens to strip Spain of top AAA rating – Ambrose Evans-Pritchard, Telegraph.co.uk
New Zealand’s AA+ Credit Rating May Be Cut, S&P Says – Bloomberg.com (The article sys “nations that have been downgraded from AAA previously include Japan, Sweden, Finland and Denmark. The rating company today affirmed Australia’s AAA rating.”)
OECD warns over growth in China, Germany and Russia as downturn goes global – Ambrose Evans-Pritchard, Telegraph.co.uk
Citigroup signals $10bn quarter loss – Independent Ireland