From the
LA Times:
Weak Sales Raise Doubt on Wall St.
Investors worry that shortfalls by blue-chip companies may mean disappointing earnings in the future. Smaller stocks race ahead. By Tom Petruno, Times Staff Writer
Sales shortfalls at some big-name companies are giving investors second thoughts about betting on blue-chip stocks this year.
What makes a corporation a `giant' a.k.a. `blue chip'? Market share. It's important to keep in mind that these household names, these born and bred in the US brands are anything but today.
When Nixon `opened the door' to China in the early 70's, GE was right there and jumped in with both feet.
STOP! Please take a moment to shift mental gears here.
We have a rogue Presidency, a Constitutional crisis and Scalito on the verge of tipping the Supreme Court irrevocably to the right, why diary about the economy?
We all gotta eat.
Don't ever take this simple fact for granted good citizen, Nature trumps politics every time.
In what can only be described as bizarre, we bust our backsides to earn a paycheck and food, the stuff that keeps us alive, is that last thing on the list of things we pay for, often with whatever's left over after we've paid everything else.
The `triple crown' of peak oil, the trade deficit and the bursting of the housing bubble (and nothing will pop that bubble faster than surging energy prices) presage a repeat of `Black Friday' in the not too distant future.
When that day comes you need to understand that there won't be a food shortage so much as you simply won't be able to get any until `they' straighten out the worthless currency situation.
Which may take much longer than you can go without food.
Can Bernanke engineer a `soft landing'? I doubt it...although it will be fun to watch it `rain' hundred dollar bills! Too bad the only thing they will be good for is keeping the fire burning while you wait for the stores to re-open.
Simply put, this is what has and will happen once the value of our `faith based' currency is cast in doubt.
The `trigger' will be when the cost of producing and bringing goods to market exceeds what they will fetch because nobody can afford them, their `disposable' income having been sucked up by rapidly rising interest rates/energy costs.
Could you work for a paycheck that doesn't cover what it costs to fill your gas tank to get there?
Could something like this happen `overnight?'
Hell yeah.
Not so much by rising energy costs alone but by a sudden `re-evaluation' of our currency thanks to our enormous (and constantly growing) trade deficit...because we no longer make anything here.
Back to story.
But Wall Street has been worried by weaker-than-expected sales growth at some major firms. The concern is that if a company is having trouble selling its basic products that, inevitably will translate into weaker earnings growth down the line.
For investors, "revenue is becoming more important" as an indicator of a company's prospects, said Howard Silverblatt, who tracks earnings trends at Standard & Poor's in New York.[snip]
What does it mean when global players like our `blue chip' corporations stall? With no new markets to expand into they inevitably start tearing their organizations apart, throwing workers out the door wholesale to `maintain' profitability.
In recent days, 3M, Texas Instruments, Johnson & Johnson and Intel Corp., among other large firms, also have reported sales that have missed expectations.
To be sure, revenue concerns aren't universal among big-name companies. United Technologies Corp., a major producer of industrial goods, said Tuesday that its quarterly sales jumped 14% to $11.3 billion.
Sales growth reported Tuesday by fast-food leader McDonald's Corp. also impressed Wall Street.[snip]
Contrast this `good news' with the announcement that the economy will shed 65,000 highly compensated manufacturing jobs in the automotive industry...on the eve of China's entry into the US automotive market...
65,000 people that USED TO earn an average $65,000 a year each...this is a 4.25 billion dollar a year reduction in US payrolls not to mention the impact this will have on the tax base.
John Butters, an analyst at Thomson, also cautioned against drawing conclusions from earnings reports so far, noting that two-thirds of the S&P companies had yet to issue results.
Still, the slide in many big-name stocks this month suggests that investors are fearful that revenue weaknesses could persist this year, analysts say.
Hunting for better growth ideas, some investors are turning to shares of smaller companies.
Case in point: Milpitas, Calif.-based computer chip maker Intersil Corp. on Wednesday said its fourth-quarter sales rocketed 38% to $176 million, and that earnings nearly doubled to $28.7 million, or 20 cents a share. The firm said the results "are just the beginning" of the near-term improvement it expected.
Intersil shares, which rose 91 cents to a 52-week closing high of $26.85 before the results were announced, jumped to $28.26 in after-hours trading.
Yea! Little companies are doing great...not. Contrast Intersil's measly $176 million gain against the $2 BILLION GE missed by...
These `small' companies that this article puts so much faith in are simply part of the giant's supply chain. When the giant's go down, so do these little feeder companies.
But the MSM thinks you're stupid which, is why they print such blather...go back to sleep, everything's fine.
Then there's this to consider:
Lifestyles of the rich and powerful
Don't let all the ethics talk fool you. Every principle has its price in Washington and on Wall Street -- although the politicians come cheaper. By Daniel Gross, DANIEL GROSS writes the "Moneybox" column for Slate.
ETHICS REFORMS are breaking out like hives in the nation's centers of money and power. In Washington, in the wake of the Jack Abramoff scandal, congressmen are falling over themselves to propose bans on gifts and freebie trips from lobbyists. In New York, the National Assn. of Securities Dealers and the New York Stock Exchange this week offered new guidelines on permissible levels of entertainment and booty that brokers and bankers can accept and exchange.
These parallel defensive efforts are being undertaken by two industries whose public images have been tarnished by scandals. There's widespread suspicion that players in both spheres don't always act in the best interest of the people who pay their salaries -- the investing public for Wall Street, the voting public for Washington -- but instead steer business and favors to counterparts who ply them with fine wines and fancy trips.
In both cases, whether it be corporate or political `lobbying' you know who foots the tab for this extravagance...you do.
The chosen few, the `best and the brightest' living in the lap of luxury at your expense.
The bad news is when the `day of reckoning' comes, these people will not only still be rich but they will still be in charge!
Non-profit, labor driven society, the time is now!
Thanks for letting me inside your head,
Gegner