The macro view
According to the equity and quantitative strategists at Bank of America Merrill Lynch, of the companies in the S&P 500 that have reported earnings (the vast majority at this stage), 23% cited the fiscal cliff in their discussion of results, compared to just 9% in the prior quarter. While highlighting negative events that management can't control is a classic earnings-season obfuscation strategy, the fiscal cliff is clearly weighing on the mind of corporate America.
Is U.S. energy independence within sight? The International Energy Agency is now forecasting that the U.S. will overtake Saudi Arabia and Russia to become the world's largest gas producer by 2015 and the world's largest oil producer by 2017. I prefer to take predictions with a big pinch of salt, particularly where they concern the future, but the "shale revolution" is clearly reshaping the U.S. energy markets. That represents an opportunity for a company such as National Oilwell Varco (NYSE: NOV ) , which is the dominant supplier of parts, supplies, and services to the oil and natural-gas drilling industries. For a comprehensive assessment of the opportunity, click here to request our newly released premium report on the shares.
The micro view
Home improvement retailer and Dow component Home Depot (NYSE: HD ) reported its third-quarter results before the opening today. In a positive sign for the housing market, Home Depot soundly beat expectations, posting earnings per share of $0.74 (ex-items) against a consensus estimate of $0.70. Same-store sales rose 4.2% -- the sixth consecutive quarterly increase. Better yet, management also raised its full-year EPS guidance from $2.95 to $3.03 (excluding the cost of store closures in China), above the $2.98 consensus estimate.