Here is an interresting outlook from SF Gate.
“Corporate profits may grow at the slowest pace of the year in the third quarter as an economic recovery that’s short on jobs and consumer demand curbs income at companies from Chevron Corp. to 3M.
Earnings at Standard & Poor’s 500 index companies may rise 25 percent in the three months through September, compared with projected gains of 34 percent for the just-ended second quarter, according to analysts’ estimates compiled by Bloomberg. Per-share earnings rose 52 percent from January through March.
“We’ve got players out there that are suffering from Armageddon hypochondria,” said James Paulsen, chief investment strategist of Wells Capital Management in Minneapolis, which oversees $375 billion. Instead of portending an economic crisis, the slower profit growth is “your commonplace, very normal mid-cycle soft patch in the recovery.”
Financial market turmoil has increased risks to the recovery, the International Monetary Fund said Thursday, while predicting the world economy will grow 4.6 percent this year, the most since 2007. In the United States, the S&P 500 dropped 12 percent from April through June as unemployment averaged 9.7 percent and new home sales slumped to the lowest pace on record in May.
Companies in the Stoxx Europe 600 index may post average profit gains of 57 percent this year, dwindling to 22 percent in 2011, based on analysts’ estimates compiled by Bloomberg. Luxury carmakers such as Daimler are benefiting from the euro’s slide against the dollar, while the euro’s weakness against the yen may have curbed earnings at Japanese technology firms.
Sales at nonfinancial companies will be the best indicators of the economy’s health worldwide, said Sinan Akiman, chief investment officer at Istanbul-based Garanti Asset Management, which oversees $4.2 billion.
“If there is no, or very limited, increase in sales of nonfinancial companies, that means the economy is still not recovering,” Akiman said. “We should especially look at big retail industry companies.”
In the United States, earnings gains for S&P 500 companies will continue through the second half of 2010 and average 34 percent for the full year, analysts surveyed by Bloomberg project.
“Our economy is beginning to repair itself, but it’s by no means ready to run a marathon,” said Matt McCormick of Cincinnati-based Bahl & Gaynor Inc., which has $2.8 billion under management. “I do see earnings growth, but it’s not going to be broad-based.”
Alcoa, the first company in the Dow to report earnings for the second quarter, may post a profit for the first time in three quarters today. Financial companies are predicted to post an average gain of 54 percent in the third quarter, with increases of 36 percent for information technology firms and 39 percent for energy companies. The estimates all represent declines from the quarter that ended in June, when those sectors are projected to have grown 84 percent, 53 percent and 73 percent, respectively.
In energy, fuel demand may be stunted at Chevron, Exxon Mobil and ConocoPhillips, the largest U.S. oil companies. New York oil futures, which traded as high as $87.15 a barrel in May, dropped to as low as $71.09 this month.
Analysts have trimmed estimates for financial companies in the past month in response to weaker revenue from trading and investment banking.
“There won’t be any standout companies reporting to the upside, and there could be some real shockers on the downside,” said Dick Bove, a Lutz, Fla.-based analyst at Rochdale Securities. Investment banking, trading and retail sales of financial products “suffered severe reversals from the first quarter,” when four of the largest U.S. banks reported zero days of trading losses, Bove said.”
Read Full Post »
Blog of Intellectual Capital 