My blogging today hasn’t been very upbeat. I’m going to indulge a bit more.
A principle I like to adhere to is to listen to what the people on the front line are saying. I’ve referred to this before, most notably in the dark days of uber-bearishness, when rays of sunshine were nevertheless being noted by corporates. We all now know how that turned out … Big equity market rally as earning grew, and grew and perma-bears got smashed.
This time, though, the tone of corporate comment is more mixed. Some recent examples, bolding is mine:
“While we expect moderate U.S. economic growth, we believe a lack of confidence in the business climate is the major impediment to a stronger recovery and job creation.
The company also warned of major risks to its broad economic outlook, including premature fiscal and monetary policy tightening, particularly in the U.S and Europe.
“The Eurozone is tightening economic policies, and policy tightening is under discussion in the United States. We believe that premature policy tightening risks a continuing weak recovery and would raise the risk of triggering another recession. …”
The parts I have bolded are, unfortunately, seemingly happening right now, raising the risks. But, just to be fair, not all the comments in this article are like this, Caterpillar still expects positive growth (read the linked article for the full picture).
Also, this just today, and again bolding is mine:
Corporate America’s hopes for a second-half pickup in the U.S. economy dimmed on Wednesday, as companies from Emerson Electric Co (EMR.N) to Corning Inc (GLW.N) warned of weakening demand for everything from industrial equipment to televisions.
Their cautious words, coupled with weak earnings reports from Delta Air Lines Inc (DAL.N) and health insurer WellPoint Inc (WLP.N) spooked investors who are already on edge over the U.S. debt-ceiling standoff, sending the broad Standard & Poor’s 500 index .SPX down more than 1 percent.
The words marked a change in tone for big companies, many of which had previously been calling for demand to pick up later in the year.
Executives warned that the long-awaited rebound in consumer spending is not materializing, as the nation’s stubbornly high unemployment leaves many families with less disposable income.
Adding to their worries, the industrial demand that so far has helped prop up a sluggish economy, is starting to fade.
“We have seen a definite weakening of general business activity in June and July,” Emerson said in a filing with the U.S. Securities and Exchange Commission.
The St. Louis-based maker of power equipment for corporate computer networks and factory automation gear noted that its order growth slowed in the three months ended in June: “U.S. and European economies have clearly slowed and entered a soft patch and it remains unclear if they will improve much in the second half of the calendar year.”
The company’s shares fell 7 percent, hitting their lowest point since September and pulled down fellow industrials including Rockwell Automation Inc (ROK.N) and General Electric Co (GE.N) .
“Emerson’s management team has their finger on the pulse of the global economy pretty well,” said Nomura analyst Shannon O’Callaghan. “Their upfront statement is sending a message about a broader slowdown.”
Even companies that posted better-than-expected results, including Boeing Co (BA.N), did so largely on cost cutting, analysts said.
The S&P500, well the ES, is bang on 1300 as I type.
1300.00 / 00.25. (“13. Unlucky for some” as my Mum’s Bingo caller says.)
About 4%-odd off its highs. The market price action is not indicating any huge concern. Hmmmm.