The Week Ahead: Waiting for more shoes

November 10, 2008

Upwards of 65% of the S&P 500 companies have reported thus far and we have been continuing to see disappointment after disappointment. It is estimated that profits for the entire index will come in 11.7% lower as compared to last year.

Many of the real problems have yet to be reported as companies have only started to feel the effects of the significant drop in sales which accelerated through October. This week will probably add to concerns about the near term outlook as we continue to accept that this will not be a V-shaped recovery. By all accounts, this is simply the start of a much longer slowdown that will require continued intervention in order escape the worst feared outcome. Even so, there are some opportunities to profit as stocks will bounce around, even in the ugliest of market conditions. Here are a few ideas.

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Economics for WEAK of Feb 15th

February 13, 2008

Just as I was thinking that there was a chance that the markets may begin to to stabilize, there is banter around in print and media that has me questioning that thought. It is apparent that there is a disconnect from reality that continues to be reported.

“as long as you can service the debt” is one of the recent comments that has me worried . The truth is that unless personal debt remains constant and income/wages are somewhat stable consumers will have less money to spend and more fear about their future.  But that is not what is actually occuring. Layoffs, reductions and a sharp reality check shows that they unless there is a continuation of the bailouts, the future for the consumer is bleak. Not good!

There are many factors that affects markets, no doubt. Yet the overhang and focus is obviously on consumers. A reassessment of credit and a real plan, instead of throwing money at the problem is more in line what should happen. Bailout, Bailout, Bailout is what is desperately wanted and the markets will continue to kick, cry and scream until is gets its way. Yet a bailout will be a monumental mistake that will create immediate relief, but long term pain. Yes, there is a moral hazard concern here!

We will be paying close attention to the export prices which should continue to drift down. That will be good.

Retail sales will assuredly be better than expected since there are no expectations. Realize that his is one of the tried and true tactics for the markets: lower expectations and then report over the expectation. Pathetic as it may seem, it is a regular occurrence.

We are expecting Retail Sales to come up short, but better than expected. OR said another way, not as horrible as is priced into the markets.

This will help to bring the focus back to the idea that we are closing in on a recession status. No doubt, this is an important week.

Briefing Economics