Earnings Down, but Not Out – Q4 2015 results are in from 173 S&P 500 members, who combine for nearly half of the index’s total market capitalization. It’s been a bumpy start to say the least – total earnings for these reported companies are down -1.6% from the same period last year on -1.9% lower revenues (with 72.8% beating EPS estimates and 47.4% coming ahead of revenue estimates).

The Energy drag is still very much in play, but Q4 is different from Q2 and Q3 in that earnings would probably be negative even if we excluded the Energy sector from the picture. The stronger dollar is costing corporations billions and cyclicality is also to blame here. For the quarter, Zacks expects an earnings decline of -5.8% on -4.4% lower revenues, which would mark the third consecutive quarter of earnings declines for the index. But, a detailed analysis will reveal that it’s really a patchwork of weaknesses and strengths, not just weaknesses. Facebook (ticker: FB), for instance, blew away Wall St. estimates and posted more than $1B in quarterly profit for the first time ever.

Russia’s Economy Has Seen Better Days – Russia’s energy-dependent economy has seen better days. In 2015, Russia’s economy contracted by its greatest amount since 2009 on lower oil prices and the impact of U.S. and European sanctions over the conflict in the Ukraine. Data shows that Russian GDP fell a steep 3.7% last year after posting a little growth in 2014. It goes to show just how much pain a non-diverse economy can feel when its bread and butter revenue generator ‘goes south.’ Many investors think Russia is bigger and more impactful than it is, but it’s actually quite small relative to the world – only accounting for about 3% of global GDP. On the bright side, there can be a strategic advantage to a contracting economy – consumers need to rein in spending and tend to do a lot of budget shopping. Maybe that’s why McDonald’s (ticker: MCD) is planning to open more than 60 restaurants there next year.

Time to be More Bullish on Europe? – The head of the European Central Bank (ECB), Mario Draghi, is a pretty straight shooter. At last count, he has kept all of his promises regarding adding whatever stimulus Europe needed to spur growth. He’s just, generally, been slow to act. Europe’s quantitative easing program essentially started when the U.S.’s ended, though the programs should have been running at the same time. Better late than never and, this week, Draghi made it clear that the bank will do what’s necessary to maintain its inflation mandate in order to also maintain its credibility. In a little under two months, ECB policymakers will meet to decide whether to continue the €1.5T bond-buying program and negative interest rates as mechanisms to stoke growth and inflation. I’d count on it, and the extra liquidity has shown a tendency to flow to stocks.

The Fed Takes a Pause – The Federal Reserve met Wednesday and decided to keep interest rates unchanged for now, which was largely expected. They may even stay put at the next meeting too as, in the past year, they’ve shown a tendency to back-off of hawkish talk when the markets turn volatile.


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