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the economy doesn't grow and even slows down but most of the fortune 500's do jave a increase in profit. Meaning they are taking a heck of a lot of market share from the small caps. Which are the basis of the economy. We'll see what it gives.
=Cost cutting. And it's not like they're gonna paint a bleak picture and see there equity and options implode. Nothing to see here... Move on...
Asking CEOs for guidance is like asking a room of them which one has the biggest dick.
A bunch of bluffs about who can more thoroughly cook their books to show improvement does not impress; they won't fess up their true state until the defaults roll in.
My thoughts exactly. What possible incentive would a company or an analyst who is guided by that company have to put out aggressive projections in the middle of a recession/depression? Lowball baby, lowball.. and then you get to keep your job when the magnificent "beat" comes in. CNBS and Reuters will luv ya for it, trust me.
Anyone have any info on insider buying the past quarter?
Its great to hear from guru's about alllll that cash corps are sitting on, like its a great big threat. Im sure they will throw it down without some positive data on growth, as they dont have to pay back that record debt back with zero roi. <sarcasm>
Our service economy's growth is highly dependent on new construction and auto sales. Virtually everyone agrees CRE isn't coming back soon, and based on coming resets, it's highly likely residential construction won't begin to improve until late 2012/early 2013. The Fortune 500 companies can cut to the bone and improve margins, but the turn-around must begin with new construction and automotive.
To feel confident about purchasing a new home or vehicle, one must be employed, receiving adequate compensation, and feeling confident about the future economic outlook. The Fed can drive interest rates into the gound, but there cannot be any meaningful recovery without job creation.
Mortgage Resets by Month (chart by Credit Suisse:)
http://1.bp.blogspot.com/_nH2Jyu86MZI/Shll2fKc-KI/AAAAAAAABzM/faHZtNK9UB4/s1600-h/CreditSuisseResetMarch09.jpg
Leaving aside the market calls, which I'm not commenting on, this is a disappointingly shallow discussion of why corporate profits are relatively strong despite the weak economy.
The key factor is the stimulus and counter-cyclical benefits, especially extended unemployment. As companies lay off employees and cut costs, normally that comes back around to bite them in terms of lower consumption. That bite has been weak. Elevated corporate profits are not just about corporate cost cutting and squeezing greater productivity out of less employees, they are also about elevated consumption relative to employment.
I'm sure profits are being pulled forward, for lots of reasons. Executive compensation is surely the biggie. Avoiding possible big 2011 tax hikes might be a factor for the Montana bomb shelter industry.
"Beats" are not an economic indicator, and no economist ever said they were. Economists compare profits to previous quarters and years, not to some touchy-feely average last pre-publication forecast of analysts published on Bloomberg. Unless your idea of an economist is Jim Cramer.
Uncertainty does not cause volitility -- that is absolutely incorrect. Uncertainty demands a risk premium, which means low(er) prices.
Quite to the contrary, it is certainty that causes volitility. Once we become confident of some new datum, we update our models and reprice assets. This repricing is volitility.
Of course, the new data can be the fact that some thing we had been confident of is proving to be wrong. This usually causes prices to fall. But that is not "Uncertainty-->Volitility." Rather, it is "Newly confident that the future is less certain-->repricing to include risk premium-->price drop-->volitility."
You know you're a leech on society when your main fear is that others will work less.
Easy - micro data driven by unsustainably low cap ex budget, layoffs, reduced benefits and productivity gains on the remaining. Bigger companines fishing in smaller ponds due to weakened demand, in some cases "buying" work just to maintain size and shifting to contract labor instead of staff. Smaller companies feel the pinch - and more likely to be driven now on cash flow basis (paycheck to paycheck). With the marco data in the toilet, overall demand likely to remain low, the trend will continue. Macro wins.
micro results do not correlate with macro national results because all large companies are international - that is what part of the new world order is all about - serving the international bankster elite.
Corporate Productivity Increase = Take advantage of 300 Million Chinese slaves.
Some good points above. This is just one more way we are becoming Europeanized. Large companies compete less and less with each other. Instead they carve out defacto monopolies based on increasingly complex regulatory crap and the scale problems involved with international trade.
The fact that today's dinosaurs are profitable means nothing. Want to buy some United Fruit Company, Penn Central, or Enron? The top companies should be in constant rotation. This easy conspiracty with the regulators is not good news.
I am seriously considering getting out of stocks and bonds entirely, and investing in equity-indexed annuities.
Specifically, annuities that lock in gains with the S&P, and in which losses simply equal zero return.
If the S&P goes down a lot one year, and up a lot the next year, I make out pretty well.
Thoughts?
Don Levit
What a piece of drivel.. Opinions are like a$$holes - everybody has got one.. And this one has zero intellectual or analytical muscle behind it.. To summarize it: economy bad, earnings cant possibly stay good, lets pick some randomly low number as an S&P target.. woohoo.. Me Tarzan - you Jane.. I hope the author is not tremendously overpaid
There are certainly a lot of details like that to take into consideration.I read and understand the entire article and I really enjoyed it to be honest.
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