Earnings Season (2Q 2009) Reports In

While I'm not sure how to entirely update this NEW section of the blog, its definitely important to report and note the upcoming earnings reports for particular companies. In general, this quarter may well go a long way to determining if the "V" shaped recovery that was priced into the market via the bear market rally the past 3 months was legit or not. TSM's take = it wasn't. Sure companies may return to the black, but that's more likely to be the result of cost-cutting measures (firing employees, reducing inventories and attempting to sustain revenue with awesome sales that result in trimming profit margins). Nonetheless, the REAL focus will be on the guidance these companies issues and their outlook for the remainder of 2009. If the guidance is weak, then that's a shot to the bulls and the STRONG recovery hopes that so many had pinned their late trades on.

First up today = Family Dollar and Alcoa

Alcoa will report after the bell and is expected to post another substantive loss. Seen by some as a bellweather of the economy (consider than aluminum is in most things...coke cans, cars, etc), the demand for aluminum can tend to reflect whether these common items are being purchased and whether economic growth is taking place. Many discount Alcoa as a bellweather and prefer to look at the shipping giants UPS and FedEx to see how business activity and inventory shipping, etc are doing. Nonetheless, Alcoa will be noticed and early signs are that it's not good.

Already reported is Family Dollar - whose quarterly profit topped expectations. More importantly, it stayed the course with previous guidance for the next quarter - meaning that it believes that revenue will continue on pace or even grow. That's a positive sign, except for this: Family Dollar is kind of in the same class as Wal-Mart, which means its a company that thrives on a frugal consumer. That tends to be negative for the majority of companies that are offering discretionary services or luxury goods that tend to be cut out by a frugal consumer. So while Family Dollar is good, this is no strong news. Indeed, its these stores and Wal-Mart that TSM sees as the stable best in the current environment and for the next year or so.