Is Corporate America Sending a Recession Warning?
This was a good segment on Bloomberg today discussing the recent weakness in corporate earnings. Some of the highlights:
- There have been 63 negative preannouncements.
- There have been 13 positive preannouncements.
- The current ratio of 83% is the highest since the Great Recession.
- The last three recessions were all preceded by large spikes in this ratio.
Now, I don’t necessarily think this is a recession indicator, but it’s becoming very clear that the surge in corporate profits is beginning to face some headwinds. There’s more below via Bloomberg’s Adam Johnson:
Bloomberg TV
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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The US may not yet be headed for a recession but corporate profits clearly are. In terms of headwinds, Fading Tailwinds of QE and Cost Cutting Represent Future Headwinds for Stocks (http://bubblesandbusts.blogspot.com/2012/08/fading-tailwinds-of-qe-and-cost-cutting.html)
I’ve been saying this for a while. We’ve had a divergence in corporate vs. main street america coming out of the recession. Cost savings and cheap debt have annualized, so the lack of demand is showing its face. meanwhile, not a whole lot changed for main street, nor does it look likely to change any time soon.
this ratio could signal:
a rotation away from growth/ quality back into value stocks.
Do we still have to discuss whether or not the US is in “recession” ?
Mickey D’s atrocious sales in each of its major global regions is a tell in and of itself that a global recession has arrived.
If no one is going to buy………………what is going to happen?