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Talking and -- earning season.
We are officially underway we saw Alcoa beat after the bell yesterday the stock is selling off -- Could investors be too concerned about rough earnings -- Orlando Federated Investors chief equity strategist joins us now for the last -- trading.
Within an earnings taken also some sectors to avoid -- first let's start with kind of as -- kicking off the earnings season as we begin with Alcoa does it truly those at the term for what we think is gonna be an -- In third quarter well I think the numbers we -- a Friday with the JPMorgan Wells Fargo -- you'd be more important bellwethers but certainly getting off on the right foot.
With with -- cola.
A decent beat guidance wasn't that bad it could have been -- quarter.
Absolutely yeah I think the guidance is kind of that is always been the big problem for Alcoa well we were little you know it wasn't as bad as it -- -- expected look I.
This is going to be -- that the sticky wicket for every -- the reality is that with this election coming up.
And the fiscal cleft -- the the company managements have actually no motivation.
To go out with anything remotely constructive in terms of guidance why do that.
If we get bad election results and the folks we -- -- Washington don't deal with fiscal cleft it would be much better to come in with extraordinarily conservative guidance and manufacture an upside surprise.
Dot com I can't tell -- that some of the sectors that are going to be in trouble are going to be industrials materials they concerned about that -- perhaps fully concern about -- mean those if there's going to be a problem in the third quarter it's going to be industrials materials companies that are export driven because the end market demand coming out of Europe in the emerging markets is -- -- be sluggish.
You have got five buckets of concern -- buckets have concerned let's talk about that right now because all of this is on your mind sure.
Bucket number one I guess is is the euros on the ongoing recession now the that the good news there we think is that the the the sector as a -- is moving in the right direction.
-- under -- these leadership this last year but you shall not important countries that are in recession and that's not gonna end any time soon.
-- -- Thought alike as the sale like the often in the happy -- I -- -- -- -- you're -- that you -- looking -- -- this green -- -- OK so there's there are your buckets eurozone emerging markets commodity prices third quarter -- -- up a quarter -- -- Washington is a huge concern because.
Of the uncertainty there we have no idea how the elections going the polls seem to be swinging around.
And it ultimately the bigger question is not who gets elected but what of the fiscal policies that emanate from that new crew and today effectively and timely.
Defuse the this ticking fiscal clock time -- Are at Washington is a big issue obviously commodity prices food inflation we got a big warning today.
A report about the slowdown in US exports of commodities that's -- -- be -- as we had a horrible -- over the year because of the drought like what are you expecting concerned about well.
I mean the read through here is as a result of the worst drought in half a century corn prices were up suddenly 75%.
We -- -- -- were up 45 or 50%.
Aside from those that the near term spike in nominal inflation pressures the bigger question is if we look -- through the inflation pipeline over the next couple quarters.
What is the read through the spill over to core inflation and and that has a question we don't know the answer to.
-- accident a lot of questions out there and the earnings are gonna give us some.
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