19 Apr 2002

Posted at 16:01h in The Friday Brief by
Over the past several days, companies have released their calendar first quarter earnings and given their best guesses about near-term prospects.  The actual earnings reports have been in rather stark contrast to the more downbeat management projections for business in the coming quarters.  Earnings reports seem to support the economic recovery, but they are somewhat below earlier expectations.  Thomson Financial/First Call estimates that profits for the S&P 500 companies probably dropped 10.7% in the first three months of 2002, more than the 8.2% drop forecast by analysts at the beginning of March.  On the flip side though, 59% of companies reporting to date have beaten earnings projections, a higher percentage than at any time since 1994: a period when the Fed actively promoted expansion as they do now. 

05 Apr 2002

Posted at 16:03h in The Friday Brief by
Companies will soon begin reporting their fourth quarter earnings to their shareholders and the market will have some real information to digest.  The market, between earnings announcements, is generally influenced more by macro economic, political, and emotional events than it is by the actual earnings performance of the sum of the companies it represents.  Since the SEC enacted Regulation FD (requiring all public companies to make significant and material announcements publicly and broadly) in August of 2001, a certain rhythm has developed.  The ‘dance’ as we shall call it between companies’ managers and analysts, media, and stakeholders actually has three movements. 

28 Mar 2002

Posted at 16:05h in The Friday Brief by
Today, economists are declaring the recession is over.  In fact, it was likely over before it was officially announced last fall.  This morning, the government released its data on fourth quarter Gross Domestic Product that showed the economy grew at a 1.7% rate. This strong increase suggests that the first quarter of this year may be the strongest in two years.  Increased spending on the part of the government and the consumer likely fueled growth as strong as 4.2% say the experts.  And that spending is likely to continue as the University of Michigan Confidence indicator rose to a 15-month high of 95.7 in March from a 90.7 in February.  Bloomberg reports that consumer spending grew at a 6.1% annual rate in the fourth quarter, the fastest pace since the second quarter in 1998. 

22 Mar 2002

Posted at 16:18h in The Friday Brief by
Investors’ primary focus continues to be on the economic indicators as we near the next round of corporate earnings pre-releases.  The week’s economic releases were decidedly more mixed than typical of the last few weeks, but the trend is still very good.  Tuesday’s news from the Fed caused some difficulty for the stock and the bond markets.  They left rates unchanged and dropped their stance that weakness poses the greatest threat to the economy, which was good news for economy watchers, but almost before the words were out, traders started selling stocks and bonds on fear that interest rates would soon be rising.  The Fed said “the information that has become available since the last meeting indicates that the economy, bolstered by a marked swing in inventory investment, is expanding at a significant pace.”