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Take on the ticker
By Michael Sean Comerford | Daily Herald Staff
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Published: 4/27/2008 12:04 AM

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Market Watch

What moved markets last week?

"At least we got off to a great start, based on some strong earnings and maybe some indications that the Fed is very close to being done (lowering interest rates) … Unfortunately, we ended the week on a somewhat sour note as Microsoft disappointed and we're seeing consumer confidence at some pretty low levels."

Overall, how has the earnings season been going?

"Overall, it's been a mixed bag, given most analysts expected higher earnings. That said, there have been area's of surprise, like McDonald's and others. But there have been some big disappointments, like GE and the like … Overall, we expect earnings to have receded by 13 percent in the first quarter … (However,) expectations have been somewhat low so a fair number of companies, more than half -- not the two-thirds we like to see -- are beating estimates."

Yet haven't many companies cut their dividends?

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"Mainly in the banking and investment banking space. The reason? They have to raise capital. And if they have to pay a hefty price for this new infusion of capital, one way to save on their cash flow would be to cut or even eliminate the dividend … But beyond the financial space, most dividends are pretty well in tact."

Do the equity markets lately have a momentum, up or down?

"My premise is the stock market is kind of rudderless right now. Valuations are reasonable, even at the lower end of the earnings range. There's a cushion built in for risk. So there isn't a lot of downside to owning equities. My only issue is, what's the catalyst to make us move higher … The pressures consumers face still exist, month to month, and they're getting worse … My sense is equities aren't going to be very interesting this year."

If equities aren't interesting, what investment is?

"I'd rather take risks with investments that will pay me while I own them and while they go sideways. High yield bonds. Preferred stock. Anything with a pretty good yield component could yield what I'll call the 'no news is good news' investment strategy for 2008."

What might move markets this week?

"In the coming week, all eyes will be on the Fed and unfortunately we'll have to wait until Wednesday to find out (if interest rates will be cut). Why? Because there is this uncertainty. In fact, the Fed move is largely up for grabs. There is a school of thought that the Fed will stand pat. Although, I'll also say that most investors believe we'll get a quarter-point cut … My view is we'll have pretty quiet trading leading up to Wednesday and the rest of the week will take its cue from the Fed."