Profits & Inflation

Good morning. Two topics will be the focus today - profits and inflation.

This is a relatively big day for earnings reports as quite a lot of closely followed firms release their numbers and guidance. At the top of the watch list include the likes of IBM, 3M, Intel, Yahoo!, & Motorola. So far, there haven't been any major profit surprises, but that doesn't mean there won't be over the next few days. Overall, earnings reports have been relatively good.

On the inflation front, the September PPI showed that energy prices are indeed causing an inflationary spike. While this data is far from surprising, investors still have to figure out whether companies can pass on their higher energy costs quickly to consumers without hurting profits and also whether consumers are resilient enough to adapt easily to those higher costs.

As for the market, we've just booked two solid days of upside gains so continued strength will certainly cause some to rethink their bearish positions. Premarket futures are relatively unchanged and I think my heavy cash position is too conservative.

Have a profitable day! I'll be back a little later with some charts to share...