2007 results have come in better than expected Close to 60% of DJ Stoxx 600 companies have reported full-year results. So far, 23% of companies have positively surprised by more than one standard deviation, and 11% have negatively surprised. The average surprise has been +1.2%. On an absolute basis, 55% of companies have beaten estimates and 43% have missed, which is slightly better than the historical averages of 53% and 46%, respectively. On a sector basis, the strongest results have been in Travel & Leisure, Media and Financial Services. Retail companies have also posted strong results thus far, but a majority still has to report earnings in upcoming weeks. The most negative results have been in Basic Resources, Chemicals, and Industrial Goods & Services. But negative revisions continue to drive sector performance Consensus EPS estimates for 2008 have fallen 3% and 2008 growth has been revised down to 8% from close to 10% at the beginning of the year. Our top-down model suggests growth of -8%, implying that further negative revisions are likely. The most negative revisions have been in Technology (-8%), Banks (-6%), and Travel & Leisure (-5%). The only positive revisions have been in the Chemicals sector. There has been an inverse relationship between 2007 surprises and revisions to 2008 estimates. This is surprising, as we would expect a positive relationship. Generally, stronger results are extrapolated to the future. Thus far, the sectors with the strongest results have also been the sectors with the most negative revisions. Revisions to 2008 consensus estimates, a forward-looking measure, appear to be a better predictor of performance than surprises based on 2007 estimates, a backward-looking measure.
avoiding short positions now. Fed rates are 160 points behind 3month rates so FED can lower rates by 150 points and is still behind the curve. A surprise 75point rate cut can happen any time now.
Buying FDAX 6500.00 ...prepared to buy more...dynamic hedge in place.... Target : 6603...at least .....
I think we are really at a important point. We either break down big or see +300 points during the next trading days. Most people don't trust last FED action and have positioned short once again. I want to wait a little because next move will be big enough to catch a nice part of it.
Just to recall people what dynamic hedging means : http://finance.wharton.upenn.edu/~benninga/mma/MiER71.pdf Dynamic Hedging Strategies In this article, the authors use the Black-Scholes option pricing model to simulate hedging strategies for portfolios of derivatives and other assets. by Simon Benninga and Zvi Wiener