Why? The guy is smart. But then, we have to believe your “get long” statement?

In your post about Rosenberg’s views today, you note that investors will be focused on capitalizing on the momentum trade and better than expected margins during earnings season. What about Rosenberg’s cautionary note about an over-extended market?

“Remember what happened in October 1987. Not that we are predicting a market crash, but recall that the massive setback in the stock market back then took place in a quarter when real GDP was ripping along at a 7% annual rate and corporate profits were accelerating at a — get this — 55% year-over-year pace; and that was the quarter that erased a year’s worth of capital appreciation in what was the steepest decline since 1929.”

I know the economic situation is very different today than 1987, but you don’t seem to be particularly cautious at the moment. To me, it just feels like a pivotal juncture where expectations could turn on a dime and focus on broader concerns than quarterly reports.

What you say about the start of earning season makes sense to me – i.e. with financials reporting first, they’ll make sure it looks good. And Alcoa does indeed seem to be setting the tone, as you say. What about 2-3 weeks from now? For instance, what if negative consumer and housing data coincide with some misses from consumer names, which report later in the cycle, correct? Isn’t there growing anxiety about the state of the consumer and unemployment, etc? Do you think the Expectation Ratio trumps such concerns? Do you imagine becoming worried at all as we get further into earnings season?

Admittedly I’m jumpy, and maybe the momentum and beating expectations is what matters for now…

Thanks.

Regarding the banks…they seem to operate in an alternate reality to the rest of the economy…

We may not see a sell the news attitude until later in the season. Remember, banks lead off and they don’t give guidance. All they have to do is beat earnings and give rosy conference call. That will set the tone….

This conflicts with your conclusion in yesterday’s “The Reason for Today’s Buying…”. Will earning be buy the news or did we already have quite a bit of buy the rumor (from S&P 500 980 to 1060) and now we will see some sell the news. Will the primary market driver be earnings or the dollar? i.e. Could we see a stronger market in the face of worse than expected earnings on a weak dollar or would better than expected earnings trump a reversal to a stronger dollar? Would say a weak dollar and strong earnings together (or vice versa) magnify the effect?

Another interesting article…

http://www.thedailybeast.com/blogs-and-stories/2009-10-06/obamas-secret-jobs-plan/