Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20
Facebook (FB) AI Mega-trend Tech Stocks Investing 2020 - 10th Feb 20
The US Constitution IS the Crisis - 10th Feb 20
Stock Market Correction Continues - 10th Feb 20
Useful Tips for Becoming a Better Man - 10th Feb 20
Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020? Part1 - 9th Feb 20
Could Silver Break-out like it did in 2011? - 9th Feb 20
The End of the Global Economy - 9th Feb 20
Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You - 9th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Corporate Earnings Will Follow The Economy – Down!

Stock-Markets / Corporate Earnings Jun 02, 2011 - 01:47 AM GMT

By: Sy_Harding

Stock-Markets

There is no credible argument anymore that the U.S. economic recovery is intact and only running into a brief slow patch. And a significantly weaker economy cannot support current earnings forecasts. Those are appalling conditions for an overbought stock market.

Wall Street has yet to begin downgrading its S&P 500 earnings forecasts, and probably won’t begin to any degree until its unavoidable, a couple of weeks before 2nd quarter earnings reports begin coming out.


But corporations are not waiting.

Already warnings that sales and earnings will be worse than currently expected have been issued by some of the world’s largest technology companies, including Cisco Systems (CSCO), Hewlett-Packard (HPQ), Logitech (LOGI), Nokia (NOK), Research in Motion (RIM), and Sony (SON); and major retailers including Home Depot (HD), WalMart (WMT), Sears (SHLD), The Gap (GAP), and Aeropostale (ARO).

And no wonder.

The merry month of May was anything but, with its reports of deteriorating conditions in April that were much worse than forecasts, as measured by the ISM Mfg Index, the ISM Non-Mfg Index, Factory Activity, and Industrial Production. There was the first drop to a negative reading by the Leading Economic Indicators in 9 months, the largest decline in Durable Goods Orders since last August, big plunges in new home starts and permits for future starts. There were big declines in existing home sales (now down 12.9% YTD), and home prices, while consumer spending rose in April by the smallest amount in 3 months.

Those reports were for April, the first month of the 2nd quarter. Now the reports for May are coming in, and are even worse.

In the last week or so it has been that the Empire State (NY area) Mfg Index, the Philadelphia Fed Index, and the Dallas (Texas area) Fed Index, plunged dramatically in May. Pending Home Sales unexpectedly fell 11.6% in April, to a 7 month low, a negative for actual sales in May and June.

This week it has been the Case-Shiller Home Price Index, which showed home prices fell again in March. In addition, the Chicago PMI Index dropped sharply, to 56.6 in May from 67.6 in April, Consumer Confidence unexpectedly fell from 66 in April to a six-month low of 60.8 in May.

And now we have the ISM Mfg Index shocking economists again by declining to its lowest level in 20 months, falling to just 53.5 in May from 60.4 in April, and the ADP jobs report showing that only 38,000 new private sector jobs were created in May, down from 177,000 in April, and in sharp contrast to the consensus forecast that 180,000 new private sector jobs were created.

A significantly weaker economy cannot support Wall Street’s current earnings forecasts, and since those super optimistic earnings forecasts have been the main support for the stock market, look out below as the market begins anticipating the downgrade of earnings estimates.

The market’s unfavorable season has just begun.

Sy Harding is president of Asset Management Research Corp, publishers of the financial website www.StreetSmartReport.com, and the free daily market blog, www.SyHardingblog.com.

© 2011 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules