Earnings Season Ramps Up, Altucher on Connecting, Buffet's BYD, and Credit Default Swaps Causing More Trouble!

Last week began the start of the earnings parade and we have seen a few 'surprises', like Apple and IBM missing, and the money center banks using a "unique" accounting rule to post profits. Investors will see a flood of earnings reports this week, and last week the market rallied on the idea that the situation in Europe may get handled with less paid than originally thought. We will see about that, in time. Just as important, the macroeconomic statistics in the United States are making investors slowly come to the realization the economy is not going to go into a double dip recession. GDP growth is slow, 1-3% is the range we have been stuck in for the last few years, and I would imagine that continues. Profits are unique to each publicly held company and their industry and strategy, but they are generally very strong. The volatility in the commodities complex makes those industries which have cost structures tied to a spe cific commodity harder to manage, so hedging costs and interest rate risks (See the Dexia example below) becomes incredibly important to protect profitability. Should be an interesting week and if you have a comment, please chime in!!! James Altucher adds his opinion on connecting for success-http://techcrunch.com/2011/10/23/9-skills-super-connector/ Mr. Buffett's BYD opens in Los Angeles-http://www.bloomberg.com/news/2011-10-23/buffett-s-chinese-car-investment-fails-to-bring-los-angeles-promised-jobs.html Credit default swaps lead to Dexia's undoing- because of interest rates going down (imagine that)- http://www.nytimes.com/2011/10/23/business/dexias-collapse-in-europe-points-to-global-risks.html?_r=1&hp As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder. Yale Bock, CFA