The Dow is down another 50 points at this writing, and both Eurozone and Asian stock markets are down almost across the board. (So are my beloved grain futures.)
David Calloway wrote this prescient editorial on Marketwatch:
"Everybody should have known the holidays would only delay it. The freight train of job cuts, plunging earnings and massive spending cutbacks set to hit the economy was, thankfully, pushed back a few weeks while stunned investors and workers across the globe caught their breath after the worst fourth quarter in decades.
"...Earnings season, the time for companies to 'fess up just how bad it's been for them in the last three months, is here."
Read his entire commentary here. He says now, "the great dying begins".
And now, the earnings disappointments begin. Yesterday, the stock market dipped when three Fortune 500 companies all issued earnings disappointments and reduced their earnings forecasts. Two also announced lay-offs. The three companies were from different industries, but seemed to bring a cold dose of reality to the optimistic sentiment of the past few weeks, especially since a few were from sectors that had previously thought to be resilient. Last night, Lenovo, a technology company, also issued dissapointing earnings news, throwing more cold water on the idea that technology stocks would escape the bloodshed and pain. They won't.
I have thought throughout this recession that eventually, investors would be disappointed, since in past recessions, technology purchases, representing discretionary spending for consumers, have always been hit hard. Tech stocks are not a safe haven from the dip in consumer spending.
And here is an article from Bloomberg today about the effect on stocks due to an expected onslought of earnings disappointments:
Stocks in Europe and Asia dropped, sending the MSCI World Index lower for a second day, on concern the deepening economic slump is wiping out earnings growth and demand for commodities. U.S. index futures declined.
Here is the entire story.
