European stocks were little changed following mixed consumer confidence reports in the UK, Europe and the US.
Eurozone confidence rose in September more than analysts’ expectations. An index of executive and consumer sentiment increased for a fifth month to 96.9 from a revised 95.3 in August, the European Commission in Brussels revealed, beating the forecast of 96.
In the UK, consumer confidence in September jumped to highest level since 2010 as signs of economic recovery encouraged spending. Market research group GfK‘s forward-looking consumer sentiment indicator rose to -10 this month compared to -13 in August. Economists were expecting a reading of -11. Read More
The Indian currency may be sliding but the country’s biggest companies have started the earnings season on the ascent.
Adding to the good news from its peer Infosys last week, IT outsourcing group Tata Consultancy Services (TCS) beat expectations on Thursday when it reported figures for the first quarter of the financial year
Net profits came in at Rs38.3bn for the three-month period, up 15.5 per cent year-on-year, on revenues of Rs179.9bn, an increase of 21 per cent compared with the same period a year earlier.
That is comfortably ahead of expectations – the average forecast in a Reuters poll of analysts was for net profits of Rs37.8bn.
The IT outsourcing group, which does a large portion of its business outside India, has benefited from the sharp depreciation in the Indian rupee over the past weeks. So, despite announcing a wage hike, the company reported strong operating margins at 26.9 per cent.
Natarajan Chandrasekaran, chief executive, said:
Overall the environment is quite good. We have delivered a well rounded growth, especially in the US, UK, Europe…The growth has been across all sector, so given that we see a great momentum.
As usual, Goldman saves the best for last. From David Kostin: “We are cutting our year-end 2011 price target for the S&P 500 to 1250 from 1400. Our new target reflects a potential return of 5% from the current index level. Our revised price target reflects the heightened uncertainty that characterizes global equity markets today. Our earnings, dividend, and economics forecasts remain unchanged. The unstable macro environment appears likely to persist for the foreseeable future. Downside risk exists to our forecast if the European sovereign debt crisis deteriorates while upside exists if substantial progress is made in addressing the problem.” And since Goldman is leaving its S&P EPS forecast untouched, this is merely a contraction in the multiple from 14 to 12.5. Now if one assumes that David Rosenberg, who earlier speculated that the real S&P EPS is closer to 75 than 96, is correct, and applies the revised Goldman multiple, that means that the S&P has about 400 points of downside. Of course all of this means that one can predict the future. Which is impossible. Which leads us to believe that today’s firing of David Bianco was merely due to him refusing to play along with the revised script. Which is as follows: the banks are buying everything that their clients have to sell in advance of, you guessed QE3 in the US and more QE in the UK, Europe and Japan for one last record bonus hurrah. While we can only hope we are wrong, if we are right this means the short squeeze on the market is about to slam shut and Goldman will make out like a bandit as usual, with the S&P soaring several hundred points on ever worse macroeconomic and geopolitcal data.