Here is how my prediction has panned out :
"In a piece David Rosenberg of Merrill Lynch put out Friday, he says unequivocally that if you're looking for the earnings recession, you need look no more -- it's here. And with rather a vengeance.
With the tally now encompassing 90% of the companies reporting, third-quarter earnings per share dropped 8.5% from the third quarter last year. A bad enough showing in itself, it's even worse when compared with a 9.6% gain in the second quarter over the corresponding '06 period and 11.6% when the whole world was smiling a year ago. It's the worst performance since that dispirited fourth quarter of 2001... "
Of course, the Brinker-bots and other mindless bulls will do this, but it won't work :
"There's a tendency, David notes, especially prevalent among the considerable number of die-hard optimists, "to strip financial-related earnings out of the pie" because financials now account for 30% of corporate profits and crow about how good everything else is. Well, everything else isn't so hot and, as David observes, "stripping out financials is like stripping out California, Florida, New York and Texas from GDP."
About the only way for the stock-markets to make any gains is for interest rates to be slashed massively, sending the dollar index towards the 40's. |
