In Bob Pisani's Jan. 9 post "The Next Big Worry", what does the "Trader Talk" blogger call the market's "big worry" now?

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Question: In Bob Pisani's Jan. 9 post "The Next Big Worry", what does the "Trader Talk" blogger call the market's "big worry" now?

Answer: earnings revisions

The Next Big Worry

The Dow is down about 4.8 percent this week, the worst showing since November.

The jobs report was bad, but not the worst case scenario that some were expecting. Two stocks declined for every one advancing, but volume was again on the light side.

In fact, volume has been light since before Christmas. The good news is that the decline this week was due to a lack of buyers, not any panicky sellers.

The bad news is that there is still little enthusiasm to buy stocks.

Alcoa kicks off fourth quarter earnings on Monday.

The big worry right now is earnings revisions. Downward earnings revisions are continuing, and are particularly strong in retailers, energy and materials. It is also picking up for the first quarter. Why does this matter? Because stock performance is fairly closely correlated with earnings revisions.

Another problem is analyst downgrades: according to Deutsche Bank, this is the worst on record, both in terms of the breadth of the downgrades (the number of stocks that are or have been downgraded) and the depth (the number of stocks that are rated at "reduce" or "sell").

Why does this matter? Because a notable turn in sentiment--stocks being upgraded--is often used as signs of a durable bottom (stocks often put in an absolute bottom before this).

As for 2009 earnings, it goes like this: there is a second half recovery expected. In particular, there is an expectation that earnings in financials and consumer discretionary stocks will stage a recovery.

This, as you might guess, is a pretty tall order given the economy.

Earnings are expected to DROP for materials and energy stocks, and here there might be a bit of an upside if we get some kind of bottom in the global economy.

Bottom line: stocks may or may not have bottomed, but to get a notable rise off the bottom, we will need more positive earnings sentiment than we are currently getting. Absent that, we will have failed rallies and will, at best, be condemned to moving sideways for a good part of the year.


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According to Bob Pisani's blog, "Goldman Sachs: A Sigh Of Relief On Street" what company did Credit Suisse criticize?

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Question: According to Bob Pisani's blog, "Goldman Sachs: A Sigh Of Relief On Street" what company did Credit Suisse criticize?

Answer: Potash

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Goldman Sachs: A Sigh Of Relief On Street

Posted By: Bob Pisani | Reporter

The CPI number, which posted a decline of 1.7 percent on the headline number and core at 0 percent, both below expectations, was not great but bear in mind much of this is due to the decline in commodities. This decline has likely run its course, so we may see much more moderation in the decline in CPI and PPI. Also bear in mind the dollar has been weaker recently, which will put more upward pressure on commodities.

Elsewhere:

1) You could hear a sigh of relief on the Street as Goldman reported a loss of $2.12 billion, or a loss of $4.97 per share.

This is pretty terrible, but it was about in line with expectations: many analysts had already expected a loss of close to $5.00 (consensus was a loss of $3.73), so anything in the ballpark was good news.

As expected, Goldman reported significantly losses in Principal Investments (including $961 million from losses in commercial real estate), and a $631 million loss due to the decline in value of their investment in International and Commercial Bank of China. There was also a loss of $3.41 billion in Fixed Income due to losses on leveraged loans and residential mortgages.

Goldman trading up about 3 percent pre-open.

2) The Fed will cut rates today, the question is whether it will make a difference. ECB Pres Trichet late yesterday said "Do we have a feeling there is a limit to the decrease in rates? At this stage certainly yes."

3) Gee, who will sign the paychecks? Best Buy trading up 9 percent after offering a separation package to nearly all corporate employees, and reporting earnings a bit ahead of expectations ($0.35 vs. $0.24 consensus). They are reducing capital expenditures by 50 percent next year.

4) Fertilizer stocks trading up as Merrill Lynch upgraded Potash , Mosaic , and Agrium though Credit Suisse lowered estimates for Potash, noting weaker demand and prices.

5) Automotive parts supplier Johnson Controls has withdrawn its 2009 guidance; no surprise given the uncertainty in the automotive sector. More surprising is their estimate of 2009 auto sales: 9.3 million units, probably one of the lowest estimates on the Street.

6) Yesterday's volume and price action was about the quietest since Labor Day. In fact, the volatility has been notably lower for the past week and a half. The S&P 500 is down about 40 points since hitting its recent closing high on December 8th, but the decline has not been intense; there has not been particularly strong buying or selling pressure in the past week and a half.

This has been part of a trend: December has seen a smaller range of price swings than November, and November smaller than October.

Auto Bailout Anger: Everyone Should Just Chill Out
There is no guarantee this will continue. In particular, there has been concerns that we will see a new round of redemption requests after January 1 in light of the Madoff scandal. But for the moment, market participants (other than those who trade volatility) are happy with the more stable markets.

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