John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Pitera who wrote (18097)	4/5/2016 7:27:54 PM
From: The Ox	of 33421

I'm not sure I agree with this comment in the matter in which it's presented: Poor productivity, weak demand, and no pricing power cut earnings Especially in the USA, a substantial portion of the drop in earnings was directly caused by the dramatic drop in commodity prices, most specifically Oil and NG. Estimates I've seen say 13% to 18% lower on the SP500 alone. Not sure how accurate that is but it's telling if it's anything over 10% of the total!! Poor productivity? Not sure on that one. No pricing power? That's true in a lot of areas. Weak demand is a certainty. But the main issue with earnings (as a whole) was the massive decline by the energy complex. Large investments have seen their "net asset value" drastically diminished or wiped out. But much of that is backwards looking. It will be tough for the US to avoid recession but I don't think it's out of the question. He put the chances of a U.S. downturn within two years at around 30 to 35 percent due to the earnings slump, up from 20 to 25 percent. Certainly a worry but not a done deal.

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