Coca-Cola and J&J beat the street, but the government problems just keep rolling on. Yup, in case you did not know, earnings are coming in. The expectations are just about as always – ho-hum. In fact, the earnings from J&J speak to issues at hand in America. True, they beat the street, but the bulk of their earnings came from prescription drugs. It would be interesting to see a breakdown of those drugs, meaning, I wonder how much valium and the like they sold. US politicians have a way to create anxiety in America.
Yet even with the problems of the shutdown and the impending default, the US economy struggles valiantly forward.
- In light of the challenges it has faced, the US economy has remained remarkably resilient. The list of challenges is a laundry list of macroeconomic gloom: financial headwinds, uncertainty out of Europe, fiscal drag, and a “premature” rise in long-term yields.
Yet, rest assured, the US government shenanigans will take some toll on the economy this fall. Consumer confidence is down, business investment is down, auto and home sales are off, all because of uncertainty – will the US default?
- The pace of growth in New York state’s manufacturing sector slipped this month to its slowest since May, but business optimism stayed strong, a report from the New York Federal Reserve showed on Tuesday. The new orders index advanced to 7.75 from 2.35, but shipments dipped to 13.12 from 16.43.
On top of the above, earnings will probably show some slack this time around as for months now, the media has been talking about the government issues, and surveys show US citizens take the possibility of a default very seriously. They get it. Consumers have been lightening up.
- Slowing earnings growth could cause more volatility in the market, but looking ahead we believe corporate America is going to turn the corner, going from modest growth to a more accelerated pace.
My point here is that what is going on in America has and will affect the US economy to some degree, and that will ripple out into the world economy, but it does not mean the ship is sinking. In fact, while the clowns dance about in America, Europe is doing the hard work of recovery.
- The Eurozone ZEW Economic Sentiment indicator came in at 59.1, which was below the consensus for 59.4 but above last month’s reading of 58.6 (August: 44.0, July: 32.8, June: 30.6, May: 27.6, April: 24.9).
Wow! That is quite the upward trend in sentiment, more than doubling to the positive in five months. More than the general, though, the specific is interesting as well, when it comes to European economic recovery. Here is something from one of the poster children of the recent economic meltdown.
- The number of mobile phone connections in Spain increased for a fourth straight month in August, data published on Tuesday showed, marking a tentative recovery after two years of client losses.
Hang in there, still. This too shall pass and when it does, get ready to jump on the moving train.
- When the stocks start to sell off there are several reasons for it, but after they sell off it seems the same reason for selling becomes the reason for buying them back. In other words, the stock market eventually takes the fear and turns it into a buying opportunity.
Yup, keep the above in mind as we slog through these dog days of early fall.
Trade in the day; Invest in your life …
