Anemic Economic Growth Is About to Hit Corporate Profits and Stocks

Anemic Economic Growth Is About to Hit Corporate Profits -- and StocksAnyone trying to solve the riddle of how corporations can be enjoying a sharp rebound in profits even as the economic recovery remains so weak won't have to wait long for answer, says David Rosenberg, the presciently bearish chief economist and strategist at Canadian asset manager Gluskin Sheff.

"The weakness in the incoming economic data in the U.S. will soon show through in reduced corporate guidance and more downward earnings revisions," Rosenberg told clients in his Wednesday report. "Think of [Federal Reserve Chairman Ben] Bernanke as CEO for USA Inc. and consider that he just cut the forecast for the second time in six weeks. These pose near-term cyclical risks to the equity market outlook."

Rosenberg expects S&P 500 ($INX) third-quarter and fourth-quarter operating earnings to come well short of analysts' average forecast -- as well as what the market is currently pricing in.

"So, earnings, which recently trended up towards $80, are settling into a $70-$75 range for the coming year," Rosenberg says. What does that mean for stocks? Bad news. Based on Rosenberg's figures, the S&P 500 is set to fall more than 20% as the V-shaped recovery in corporate earnings comes to an abrupt end.

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gopditzs

If you want a job stop thinking as a Welfare Republican who drinks the Faux Cool Aid by Foreigners Rupert Murdoch and his Partners the Saudi Royal Dictators and be a American who thinks like a Democrat; just like our liberal forefathers who created their own destiny as they rebuked the Conservative Red Coats of Great Britain not only created their own jobs, life as well a nation for themselves but also all others! Never forget who who ran the US on 9-11, 2 Failed Wars, and Began the Great Recession as they called Americans Babies for stating the obvious that the US was in trouble and refused to claim anything other than fundamentals were sound till Paulson came to Congress begging at the 11th hour for over 700 Billion Cash or Monday the US would fail Economically and the US would cease to be any resemblance of what we were prior to such abject failure which even the blue collar labor saw coming but the GOP and Wall Street Titans denied to the end and which they then got GOP Welfare Redistributing the largest wealth redistribution ever in a few hours as the GO)P took Private Wall Street Debts and made them US Tax Payer Obligations and still these people got bonus's and salary! Even when such was questioned of its varsity the GOP demanded they deserved such Golden Parachutes and great wealth for failure!

August 19 2010 at 1:15 AM Report abuse rate up rate down Reply
jbluhm1951

I disagree with the writer, but base it solely on what I see on main street. The problem is simple to solve. Do not raise taxes, and let the citizens know taxes will not rise for at least 3 years to 5 years. Capital gains tax can be raised from 15% to 20% on the first $100,000 dollars, and then go up from there. This way those who do not take a salary from their company but takes stock options can then pay their fair share of taxes. The recent health care plan passed should be over-hauled if not just do away with it. The government needs to promise no more stimulus, no more bail outs, no more vote buying and put some honesty in govenment. The President needs to realize Amierica is not really a bad place and he needs to stop tying to please those countries who hate us by putting America down. We could use some positive re-enforcement coming out of this President's mouth, rather than reacting to everyone who disagrees with him on something.

August 18 2010 at 8:38 PM Report abuse +2 rate up rate down Reply
jbluhm1951

The economy is not as weak as some would think. The retail business I am in is having solid sales gains weekly. People are buying, and as long as people buy, corporations, manufacturers will produce more goods to sell. Once we get the Change needed in Washington, hopefully Nov. election will help, we will see the economy take off.

August 18 2010 at 8:29 PM Report abuse +2 rate up rate down Reply
Jen

Keep adding tax payer jobs while tax revenue generating jobs decline. Great model for succes that annointed one backs and moron kool aid drinkers follow. What a sustainable model!

August 18 2010 at 8:16 PM Report abuse +1 rate up rate down Reply
otterdad48

One of the problems with downsizing, laying off and outsourcing jobs is that it makes economic recovery almost impossible. You see that employees are not just an entry on the debit side of a balance sheet they are consumers who buy the goods and services that business offer.

August 18 2010 at 5:13 PM Report abuse rate up rate down Reply
donut999

amen article writer. big companies did the same thing little people did. they cut back, got smarter, worked leaner, etc.. it shows in the results, but, the guy does ask the great question--where are we going from here? they can only layoff 20,000 people once. the 80,000 folks they did not layoff are working harder, faster and cheaper. i doubt they mind though, at least they have a job.

August 18 2010 at 4:56 PM Report abuse +2 rate up rate down Reply