By: Kent Engelke | Capitol Securities

Yesterday, I read at least seven articles commenting that the second quarter earnings season is “mixed.” However, the data suggests the complete opposite. According to Bloomberg, at the end of last week a record 95% of the S & P 500 companies that have reported earnings have exceeded expectations. The sample is not small… eighty-six have reported as of yesterday morning.

Moreover, Bloomberg reports 67% of reporting companies have revised guidance upwards, the most in five years.

Wow! Reality is considerably different than the written perception.

I cynically ask is NFLX’s large miss a reason for this narrative? This week, several of the must owned technology companies post results and some are writing the markets cannot withstand further disappointments. Is this the result of the massive amount of wealth concentrated in just a few issues? I think yes.

Radically changing topics, many times I have written about the illiquidity in the bond market. The front page of the WSJ commented about some of the issues, many of which are regulatory induced.

The question at hand is whether or not trading mechanics can be changed before a liquidity crisis unfolds. Unfortunately, it is my first-hand experience that regulations are rewritten only after a crisis unfolds, which is equivalent to going to where the hockey puck was, not to where it is going. Hopefully, today will be different.

Speaking of the bond market, Treasuries rose to the highest yield in a month breaching its 50 day moving average. An obvious catalyst was absent with some pointing to “technical factors” in an illiquid market, a scary comment given the Treasury market is the deepest market in the world.

Last night the foreign markets were up. London was up 0.81%, Paris was up 0.84% and Frankfurt was up 1.34% China was up 1.61%, Japan was up 0.51% and Hang Sang was up 1.44%.

The Dow should open nominally higher on earnings and global economic optimism. GOOG was the inverse of NFLX as its second quarter exceeded in almost all dimensions. The 10-year is up 1/32 to yield 2.95%.