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US..Time to wake UP!!

  1. From financial sense market wrap
    "The Grand Banks are no picnic in the Fall -- rough seas, strong winds, and plenty of bad weather. The stock market in the Fall is a lot like the Grand Banks, filled with plenty of down days, strong financial headwinds and perilous markets. By the end of the third quarter, most analysts are busy chopping their estimates for the year as they are doing now. Predictions for a second-half recovery in earnings are being jettisoned by the day. Nobody is buying the recovery scenario any more, so they are revising and lowering profit targets and earnings estimates to lower levels. They still have a long way to go. Wall Street is still predicting over 20% pro forma earnings gains for the fourth quarter, but companies are telling a different story. Layoffs are starting to accelerate again with SBC announcing it would lay off 11,000 workers and Delta Air will eliminate 1,500 flight attendants as air traffic declines. Even GE, which helped to ignite a short-lived rally this week by meeting lower estimates, said 2003 would be a tough year.

    One of the most telling stories this quarter is that very few companies see signs of improvement. Company warnings have been coming from a wide swath of industries ranging from tobacco, food, industrial and technology to telecoms. You don’t layoff 11,000 workers if industry conditions are improving. Once again there is a sharp disparity between what analysts and economists are forecasting and what companies are saying and doing. While the second-half recovery is being abandoned after failing to materialize for the third year, economists are now forecasting 3% economic growth next year. They have been wrong for the past three years, so maybe they will get it right the fourth year. The forecast of strong economic growth next year is based on the consumer. In other words, the fate of the economy is based on the consumer going deeper into debt to support consumption. According to consumer surveys this week, confidence and sentiment continue to decline. If I might be so bold to suggest, plunging stock prices and job layoffs might be related to confidence and sentiment. The real bellwether to watch will be this winter’s Christmas retail season. If sales fall dramatically as expected, it will be another piece of evidence that the consumer is starting to retrench. Another important clue will be to watch mortgage rates. If they rise, the refi boom will be over, and along with it, consumption


    Full Article Here

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