Earnings Season Begins with Alcoa, the Unofficial Pole Position Public Company

Alcoa, Aluminum Company of America, the unofficial Pole Position company for earnings season reports late today and commences earnings season, unofficially.

Professional investors such as ourselves as well as many others have been waiting anxiously to hear earnings reports (90 day treadmill) of publicly traded companies.

90 Day Treadmill - Earnings Season

According to Thompson Reuters here are a few highlights of highest and lowest expectations according to sector of membership (yearly change):

• Materials 91%
• Energy 71.8%
• Technology 56.5%

and the lowest:

• Utilities – 5.3%
• Telecommunications – 1.9%
• Health Care 4.7%

While these numbers may seem extreme, most sectors entered the latest recessions at different times and therefore are exiting the recession at a different time as well. The key to earnings will be expectations versus realities and what managers predict for the remainder of 2010 and looking forward to 2011.

As we stated in our latest Performance Cover letter, we felt many participants may have become too negative. Keep in mind markets may react in any way and seasonally July is a weak capital market month.

Have a Great Day!

JK