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from Counterparties:

MORNING BID – The consumer outlook, out of earnings

The next several hours will bring a handful of important consumer names that may give investors some idea of the progress the consumer economy is making. This only works as a barometer to some degree. Sales at S&P 500 companies far outpace the growth of the overall economy, which in part explains why the market itself is doing as well as it is (we’re in the 1980s now on the S&P, so crank up the Def Leppard) and the rest of the economy is lagging behind.

And mass market consumer-facing names like McDonald’s and Coca-Cola disappointed investors with their results on Tuesday, so it will be interesting to see whether others, like Whirlpool - which has tended to buck the general trend - will fare a bit better with their results. (Whirlpool, for its part, cut its outlook amid weak results, but North American sales were up 4 percent excluding currency effects, so score that one on the positive side of the ledger.)

Another consumer name that would lend some credence to the idea that Container Store and Lumber Liquidators put forth – that the U.S. economy remains in a funk – would be Ethan Allen Interiors. The furniture retailer actually comes in as undervalued, per StarMine expectations for growth in the coming decade, and it, too, has managed to steadily increase profit margins.

The company’s valuations compare favorably with those of its competitors: A lower forward price-to-earnings ratio than the likes of Haverty Furniture, Laz-E-Boy, and Leggett & Platt – and while it's not the biggest of bellwethers (it’s a $659 million company, putting it in the S&P small caps), it has a certain cachet that puts it squarely in the mass market luxury area.

from Counterparties:

MORNING BID – The quiet days for Apple

Apple’s been the two-ton behemoth of the stock market for so long that it is going to be surprising, in a way, to see that the company isn’t really pulling its weight anymore when it comes to its percentage of S&P 500 earnings. This sort of thing can be a bit silly, but Howard Silverblatt, the index guru over at S&P Dow Jones, points out that Apple right now is about 3.2 percent of the total market value of the S&P while at the same time accounting for an expected 2.8 percent of earnings in the S&P – the first time since 2008 that Apple hasn’t delivered a percentage of S&P earnings equivalent to its market value.

In the past few years, Apple has tended to carry much of the S&P on its back, such as in the fourth quarter of 2011 and first quarter of 2012, when it accounted for 6 percent and 5.2 percent of the index’s earnings – compared with accounting for about 4.4 percent of the market’s value at that time. In the last quarter of 2012 the stock was 6.3 percent of the market’s earnings and was less than 4 percent of its market value.

from Breakingviews:

BofA stuck in a low-profitability trap

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Bank of America is stuck in a low-profitability trap. Several businesses at the Charlotte, North Carolina-based bank actually put in a good showing for the second quarter. The trouble is, BofA as a whole is still struggling to churn out solid earnings – even after aggressive cost-cutting.

from Data Dive:

Citigroup settles

Citigroup reported earnings today — coincidentally the same day the Justice Department announced a $7 billion settlement with the bank over crisis-era mortgage securities. Its quarterly earnings fell 96 percent to $181 million and its return on equity was a mere 0.2 percent — mostly due to the aforementioned fines. However, the numbers are nonetheless stronger than expected, largely because of a strong quarter in its fixed income business.

Reuters has an interactive graphic showing Citi’s performance versus other big banks. Below is a still — the interactive is here.

from Counterparties:

MORNING BID – Hewlett-Packard and the declining sales

Shares of Hewlett-Packard fell late in Thursday's session after the company inadvertently released results just before the closing bell, but the year hasn't been so bad for HPQ at least where its stock is concerned - shares are up about 13.6 percent so far in 2014, part of solid performance by a group of stocks Goldman Sachs identifies as "weak balance sheet" companies, the kind of phenomena that occurs when the economy seems to be in recovery and financial conditions are favorable, which they are right now - low rates, high levels of borrowing, reduced covenants in loans and further appetite for risk.

That may change as financial conditions tighten -if Treasury rates start to rise, for instance, or if banks throttle back on lending - but at least HPQ has something going for it right now. The company is cutting 16,000 jobs as it tries to revive its moribund profit margins and reverse what is now 11 straight quarters of sales declines. Companies with weak balance sheets in Goldman's screen such as HPQ, Time Warner, Norfolk Southern and Delta Airlines generally post lower per-share earnings growth and weak sales growth - often companies in more mature industries or that find themselves left behind one way or another.

from Counterparties:

MORNING BID – There’s A Sale at Penney’s!

We come not to bury J.C. Penney, because everyone else has done that a few times over already.

Headed into the last gasps of earnings season, overall earnings growth for the quarter is currently 5.5 percent - much better than the 2 percent expected at the outset of reporting season and trending back in the direction of what had been expected Jan. 1 before, well, before anybody knew anything at all.

from MacroScope:

Bank of England sticks to its view and analysts, some defiantly, stick to theirs

Bank of England governor Mark Carney gestures during the bank's quarterly inflation report news conference at the Bank of England in LondonMark Carney has delivered what is probably the clearest message on the trajectory of interest rates from the Bank of England for a very long time.

There was no more  talk of "forward guidance", but the guidance was pretty clear: no change to the view, on track for a first rate hike in a very gradual series, starting around a year from now. Nothing to see here.

from Counterparties:

MORNING BID – Stability, earnings, and Russia

The S&P 500 heads into the last session of the week less than 1 percent from an all-time closing high, corporate credit spreads have generally continued to shrink or at least stay stable, and overall investors remain enamored of riskier assets even though the momentum crowd has had its head handed to it for the better part of two months now.

Volatility is low overall, and while earnings estimates are coming down for the second quarter, they're doing so at a pretty slow pace - with the second quarter expected to come in at 8.1 percent from 8.4 percent estimated on April 1. That's pretty tolerable, though of course we've still got more than half of the earnings season left to get through.

from Counterparties:

MORNING BID – Microsoft, up from the ashes

Microsoft heads into tonight’s earnings report coming in on a high, having recently breached the $40 threshold for the first time in forever (it’s all Frozen references this week, folks). The company pushed past $40 a share in early April for the first time in nearly 14 years, and spent most of that time ensconced in a tight range between about $22 and $35 a share, depending on what the overall market was doing. It tanked in 2008 with everything else, and then spent the 2010-2012 period putting together a cumulative 13 percent price loss in the midst of a raging bull market, if evidence of its sad-sack status couldn’t be more apparent.

This year, though, the company’s been the beneficiary (along with the other “horsemen,” Cisco, Intel and Oracle) of a shift away from overvalued momentum-driven stocks towards cyclical technology stories. These are the types of companies that produce steady revenues even if they’re not doing anything but collecting on consistent upgrades of stuff that everybody needs and doesn’t really like. And really, the company had a stranglehold over PC operating systems that it defended aggressively, let’s not kid ourselves.

from Counterparties:

MORNING BID – Volatility, or lack thereof

It was another disappointing night for those looking for heavy volatility out of those reporting earnings - the trio of biotech stocks many were looking at, Gilead, Illumina and Amgen, had varying results, but they didn't show the kind of bounce that some people were expecting.

In after-hours action Illumina was moving around 7 percent, short of the 11 to 12 percent move the options market was looking for, and Gilead was up around 3 to 4 percent, less than the six percent gain that the options market had factored in. Following the disappointment among those betting on volatility post Netflix-earnings -- and the stock still moved a lot, just nowhere near as much as expected -- it raises questions about whether some investors might start to temper expectations when it comes to overall volatility, because putting down money on a big swing has been a bit of a loser so far.

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