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Strategies & Market Trends : Market Gems-Trading Strong Earnings Growth and Momentum

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To: Jeff Jordan who wrote (4289)2/10/2001 11:32:45 PM
From: Jenna  Read Replies (2) of 6445
 
The next few weeks will determine whether a correction in manufacturing turns into something nastier. What is already clear, and makes worse scenarios more likely, is that growth in corporate profits is certain to slow this year, recession or not, due to sluggish growth in demand, rising interest costs (caused by refinancings of debt secured when long-term interest rates were lower than today) and accelerating depreciation costs. According to Bank Credit Analyst, an insightful newsletter, even if America can avoid recession, annual profit growth is likely to turn negative this year; and if there is a recession on the scale of 1990-91, operating profits could fall by as much as 15%. The need to stop profits tumbling may lead company bosses, ever mindful of their share options, to act ruthlessly—and thereby make a recession not likely but certain.
economist.com
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