Earning Acid Test: Alcoa II

There was some pretty aggressive sell-offs in the industrial stocks sector within the Dow 30 caused by Alcoa earning dissapointment. But it did not, however, spread to other sectors. Whether this is going to be a Chinese water torture style - as sell off will bleed their victims slowing - sector by sector yet to be seen. This is not a big news, DJIA falls only by 0.3% which is almost a non-event. The US market was OK and people are less bearish. For example:

Jan. 13 (Bloomberg) -- Options traders are betting stock swings in the Standard & Poor’s 500 Index will decrease at the fastest rate since the aftermath of the market crash in 1987, a sign that equities may keep rallying.

The difference between the benchmark index’s historic volatility and a gauge of so-called implied volatility based on expected swings rose to the highest in 21 years, according to data compiled by Credit Suisse Group AG and Bloomberg. The gap widened as investors paid less to insure against price declines, sending the Chicago Board Options Exchange’s Three-Month Volatility Index lower.

Historical volatility must fall 25 percent to bring the measures into accord. The last time the difference was this wide, stocks climbed for two quarters, according to data compiled by Bloomberg. Declining volatility is usually bullish for equities because it shows growing investor confidence.

(click here to read more)


But the real big news yesterday was the US trade deficit started to shrink as they cut import ( less spending, cheaper oils and less export). The rest of the world is going to make adjustment to their habits ( translation --- suffers).

(WSJ)Trade among nations is declining sharply around the world, an unusual development even in a recession -- and one that makes it more difficult for countries to pull out of their economic dive.

Combined exports and imports by the U.S., the world's biggest economy, dropped 18% in the four months from July to November, to $326 billion from nearly $398 billion in Commerce Department figures released Tuesday. Two-thirds of the drop was in imports, which helps explain why so many countries dependent on trade with the U.S. are suffering: Their exports, a key source of growth, are falling as spending by U.S. consumers and companies continues to sour.

Men walk past stacks of shipping containers at a port facility in Shanghai.
Japan, the No. 2 economy and heavily dependent on exports for growth, posted a 27% decline in November compared with a year earlier, its Ministry of Finance said Tuesday -- the biggest slide it has ever recorded. Its imports also dived by 14%, contributing to the pain of exporters elsewhere in turn.

China posted its most severe foreign-trade decline in at least a decade, in government figures for December released Tuesday. Germany had its worst export drop this decade in November, down 11.8% from the previous year; the next three biggest European economies had drops nearly as bad, according to a calculation by The Wall Street Journal.