Jul 13 2012

Double Digit Growth Is Not ‘Normal’

Our idiot ‘Masters of the Universe’ who can’t even make money on carry trades at 0% borrowing costs are soon going to learn that 10%+ return on investment is not part of the Constitution or Bill of Rights.

Get ready for the end of record corporate profits

By MATTHEW CRAFT, AP Business Writer

6 days ago

For almost three years, no matter what has rattled the financial markets – a debt crisis in Europe, high gasoline prices, a slower economy – investors have been soothed by rising corporate profits.

Over recent weeks, a motley collection of chain stores, steel producers and technology titans have warned of slowing profits. They all point to similar culprits – flagging sales to Europe and slower economic growth in China.

“You’ve seen the evidence,” says Adam Parker, chief U.S. equity strategist at Morgan Stanley, the investment bank. “A ton of companies have already told you the economy is slowing.”

The list of companies that have warned of trouble is long and varied, and includes well-known names such as McDonald’s, Cisco, Starbucks and Tiffany & Co.

Add them up, and 94 companies have lowered their estimates for this earnings season, which begins on Monday when Alcoa, the aluminum maker, reports its results. Only 26 have raised their estimates.

Morgan Stanley’s research team says the ratio hasn’t been that lopsided toward the negative since the summer of 2001, when the economy was in the middle of an eight-month recession brought on by the bursting of a bubble in technology stocks.

Shares Fall for a Sixth Day


Published: July 12, 2012

Wall Street stocks slid for a sixth consecutive day on Thursday as concern spread that weaker global economic growth and the European debt crisis would hurt American corporate earnings. The Standard & Poor’s 500-stock index was headed for its longest losing streak since mid-May.

Aluminum maker Alcoa, which started the second-quarter earnings season on Monday, reported weak revenue because of the faltering global economy. Fastenal, an American industrial distributor, reported revenue Thursday that was weaker than analysts had expected.

Marriott, the hotel operator, and Progressive, an insurance company, both fell after reporting weak financial results.

Supervalu, the supermarket operator, plunged by nearly half after it reported a sharp drop in net income late Wednesday and suspended its dividend. The company owns Albertsons, Jewel-Osco and Save-A-Lot.

Supervalu’s losses dragged on a rival grocery chain, Safeway, which fell 10.5 percent. Safeway’s was the biggest percentage decline in the S.&P. 500 index.

The weak corporate results will probably lead analysts to lower their quarterly earnings forecasts for the entire S.&P. 500, said John Fox, a co-manager of the FAM Value Fund, which specializes in small and medium-sized companies.

New numbers to be released on Friday are expected to show that China’s growth in the second quarter fell to 7.3 percent from the previous quarter’s 8.1 percent, which was a three-year low. Revenue from the construction, shipbuilding and export manufacturing industries might have been cut in half since last year.

1 comment

  1. ek hornbeck

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