While this earning season has been surprising nearly everyone, including us. A couple of points of caution should be noted.
One; Over 69% of the companies in the S&P 500 have beaten their earnings estimates, these numbers aren’t surprising. Most companies after the fourth quarter reduced earnings expectations yet again and they really are beating much-lowered estimates.

Two; These better numbers are not translating into growth. Corporations haven’t been expanding their businesses. They haven’t gone on a buying spree. For the most part, their increased earnings picture has done little to improve the economy.

Cash on hand continues to increase and we don’t see that as a sustainable long-term business model for any company. Corporate debt reduction continues, which only helps the bottom line of the business.
Short-term, these actions are desirable for any business entity going forward but there has to be a point where having a cash hoard hurts the company and they will look to use that money to strengthen the future for the company. Our question is when?

The coming week will be loaded with mini minefields that investors will have to navigate through.

Foremost on everyone’s minds will be the Federal Open Market Committee meeting Tuesday and Wednesday. The consensus is that the FOMC will leave things pretty much as they are. While unemployment is still a major concern, the economy is moving in the right direction and the Fed believes that their stimulus package is the reason why. At this point, we can’t argue with that anymore.

Some important numbers we will be watching: Pending Home Sales, Consumer Confidence, PMI Manufacturing Index and The Employment Situation on Friday.
Some important earnings to look for: Pfizer (PFE), Merck (MRK), Aetna (AET), Visa (V), Boston Properties (BXP) and Kraft Foods (KRFT).