Will Earnings Season Bring Surprises?

The economic news, especially employment numbers, have disappointed investors lately. Stocks have been dropping fast and it might take a big decline or an unexpected catalyst to reverse the downward trend. The next few weeks should tell the true story of the economy. Alcoa will report its earnings tomorrow followed by most other companies. We have low expectations for many positive surprises but hope we are wrong. However, until the green weeds start to look like real green shoots, we will sit on our cash and maintain the puts on the S&P. Be cautious and wait for the tea leaves that say business is improving, housing has bottomed, the consumer is ready to spend, the financial system is once again functioning normally, and lending is on the rise.