Disjointed Thoughts for Wednesday

Earnings have unsurprisingly been better so far. Admittedly it’s early days but they’re running around the same % beats as Q1, c65%, with 23/36 companies in the S&P coming in better. The theme of top line worse, bottom line better continues, see CSX in the US and Philips/SKF/Acergy here in Euroland as examples. Intel, however has really buoyed the market. This was better a better report top and bottom line and on the guidance front. As you’d expect, tech is leading the charge this am. The Macquarie upgrade of Samsung helped things too and the Kospi put in its strongest showing since 10th June, up 2.7%. Even the Baltic Dry printed up, in what was its maiden foray into the blue for the month of July.

Risk assets are well bid across the spectrum and even NZD, which, it was thought would fall foul of the Uridashi tsunami, not only rallied in spite of it, but also in spite of talk of a an actual tsunami; failing to break 0 .64 for more than a nanosecond.

So it’s Risk On again now, courtesy of a Meredith Whitney bullish intrasector/bearish sector call on Monday (the market focuses to what it wants to, I guess) and some earnings beats (ditto). Although if we had a few more genuinely better numbers a la Intel, the market really could get excited. It’s been shaken into life for sure today with volumes around the 75% level on the day

Economics wise, we’ve had some UK data today, showing the unemployment rate worse than expectations at 7.6% although the claimant count was better. Earnings and wage cost continued trending downwards too providing further evidence of deflationary effects. The US CPI has come in slightly higher at the core level with apparel leading the way, although overall, not much to report there.

One thing which did catch my eye was that WFC had sold $600m of subprime loans @ 35c on the dollar. It sounded low to me, certainly given the credit rally we’ve seen although looking at ABX, the sub bonds look like they trade c20-30 so maybe not. Still it all seems to have passed off without much noise and the key is where they had them marked. I would think though, that if $600m of subprime was sold anywhere near the marks they have, then the market would have been treated to quite a bit of WFC trumpet blowing. Just a thought…