Housing, state spending and jobs - bogeymen for rest of 2010

Earnings reports for Q2, which were announced over the last month, were outstanding!  Net income grew 42%, revenues grew 11.8% and 75% of firms beat expectations.  Not surprisingly, stocks soared 7% in July, taking the S&P 500 back to unchanged on the year.  No carry forward of price appreciation so far in August.  With daily price swings in the range of 1%, stocks are down 2.3% on the quarter and down 2.4% on the year.  Why can't investors focus on the generally rosy outlook for corporate earnings for more than 24 hours?
 
With each passing year, it seems that fewer and fewer investors are actually researching individual companies.  Instead, the focus revolves around the "macro picture" of economic growth, money supply, inflation or deflation, and the risk of a "double-dip" recession.  The prevailing narrative is that jobs growth will remain flat to negative, housing will start falling as the current stimulus ends, and plunging state spending, driven by plunging tax receipts, will offset any remaining federal stimulus.

Read the entire commentary here.