At a time of year when so many of us are trying to watch what we eat, the investment world has, in a contrarian sort of way, handed us an array of themes to nibble on as we embark on the first full week of business in the New Year.
Chief among them is, what many feel, a temporary respite in the Euro's (EUR/USD) recent pounding which has pushed the world's newest currency to a 16-month low while lifting the Dollar Index to comparable highs. As the leaders of Germany and France hold another round of 2-way economic discussions, the short-term bounce in the Euro is not unexpected.
What is surprising many investors is how well stocks have done in the face of a strong U.S. dollar, with the likes of Jeff Saut from Raymond James calling it ''amazing." If this "dollar up, stocks up" trend is able to continue, it will mark a giant change in one of the market's most consistent dynamics over the past year by contradicting the well established belief that stocks can only go up when the dollar falls.
Not unrelated to the currency swings will be the impact they have on the earnings results of multi-national companies, such as Alcoa (AA), which kicks off the fourth quarter earnings season after the close today. The importance and relevance of Alcoa's results are directly connected to its shrinking market value, which has slumped to about $10 billion. While Alcoa has missed consensus EPS estimates in 5 of the past 8 quarters, it's forecast this quarter has been cut so drastically that some investors are moving in for a trade, and the aluminum producer is leading the Dow Industrials today.
(Lennar (LEN) and SuperValu (SVU) are set report earnings Wednesday, with JP Morgan (JPM) on-tap for Friday morning.)
A pair of trade shows is also in the pipeline this week, including the Detroit Auto Show which opens today, and the influential Consumer Electronics Show (CES) which Macke will be attending in Las Vegas.
"Of course I am rooting for the home team," he says of the auto show, which industry observers say is not expected to be dominated by foreign manufacturers for the first time in a generation. As it is, the S&P 500 Autos & Components industry group is up over 7.5% this year alone, in stark contrast to its nearly 30% decline in 2011 that saw it at the bottom of the performance pack.
And lastly, by Wednesday morning, the results of the New Hampshire Republican Presidential Primary will be in. With former Massachusetts Governor Mitt Romney close to 20% ahead of his rivals in the polls, a Granite State victory will make him 2-for-2 and will go a long way towards clarifying what the ''field for the fall" will look like.
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