We kickoff the fourth quarter earnings season for 2011. The Dow had an up and down week and the euro crisis continues – all of which will affect coming fourth quarter earnings season reports. And as usual, providing personal finance advice, real estate advice and consumer advice on the Ilyce Glink Show January 15, 2012 on WSB Radio.
It was an interesting week, two weeks into 2012, for the economy. Initial expectations were that 2011’s fourth quarter earnings season, which starts about now, was going to be huge. But now, experts are beginning to stand down from those predictions.
The volatility of the stock market is one reason. The Dow ended slightly up at 12,422 points, however there were a couple of sizeable downs thrown into the mix. With continued trouble in the euro zone and that continent’s recession, the volatility is really no surprise. How bad is it in Europe? Well industrial output is roughly the same as it was six years ago, and well below its 2008 peak. At the same time, Europeans comprise roughly 27 percent of the revenue intake for U.S. companies. Simply put, if the euro zone is hurting, so are we.
The problems in Europe are certainly contributing to the Dow’s manic depression, but savvy investors see additional troubles ahead for the fourth quarter earnings season. Who will miss estimates and what does this mean? Is any sector safe anymore?
Formerly dependable stocks like Tiffany and Co. are no longer looking so certain. The entity recently reported a drop in year to year sales. Banking stocks are no longer a sure thing either. Can any sector meet the bedrock criteria of “solid” investment?:
- Earnings visibility
- Non-cyclical characteristics (i.e. not the housing market)
- Demonstrated ability to pay dividends
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