S&P 500 Down Again, Bernanke Out in 2014

As I suspected, once the S&P 500 pierced its 50-DMA, the bears got much more confident. For the second time in the last three days, the stock market is getting hit hard. The S&P 500 is down to 1,414 which is its lowest level since September 6th.

Andrew Ross Sorkin reports in the New York Times this morning that Ben Bernanke may leave the Fed when his term expires in 14 months, no matter who wins the election.

But there is another wrinkle in the parlor game calculus: Ben Bernanke, the Federal Reserve chairman, is likely to need a successor, too. If Mitt Romney wins the presidency, he has already pledged he will replace Mr. Bernanke, whose term as chairman ends in January 2014, in just over 15 months. However, Mr. Bernanke has told close friends that even if Mr. Obama wins, he probably will not stand for re-election.

The good news for us is that our Buy List continues to do well. Reynolds American ($RAI) reported Q3 earnings this morning of 79 cents per share which matched Wall Street’s estimate. Revenues fell 3.8% to $2.12 billion which was $60 million below consensus.

To me, the most important news is that Reynolds reaffirmed its full-year forecast of $2.91 to $3.01 per share. For the first three quarters, Reynolds earned $2.21 per share so that means they see Q4 coming in between 70 and 80 cents per share. I don’t think they’ll have any trouble hitting that.

Later today, we’ll get earnings from AFLAC ($AFL) and CR Bard ($BCR).

Posted by on October 23rd, 2012 at 10:04 am


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