Thursday, June 26, 2008
If you look at Table 12 on GDP, you see massive drops in corporate profits pretty much across the board. It is definitely not time to be thinking about increasing corporate taxes!! The trajectory for all domestic corporations over the last four quarters is:
+ 84.4So it does not seem that corporations will be on a spending binge, and needless to say this is bad for stocks. With inventory valuation adjustment, the net drop in profits is 172.9 billion. Market based PCE deflator is 3.8, compared to the fourth quarter's 4.0. Smirk. Anyone care to hazard what it will be for second quarter?
I still think fair valuation for the Dow is between 11,200 and 11,800, but it could go lower for a few months. Things are getting to the reality-based stage.
If you'd like to read about a disaster that's not happening, I recommend this pdf file of McIntyre's Ohio presentation on his work checking the IPCC climate proxies. The IPCC does not come off well, which is probably part of the reason Hansen has descended into barking insanity.
Data from Europe continues to show incremental weakening. Except for Spain, which is the European equivalent of Florida or southern California, it's mostly related to energy prices. So there is nowhere left to run except into commodities to get your 2 and 20. And running they are.
Eventually, there's going to be another round of losses related to that run. So I really recommend the McIntyre IPCC file. It's 45 pages of sanity, which you will not get in the markets this week. Just remember, many disasters don't happen as scheduled.
Semiconductor Equipment and Materials International (SEMI) data shows
that North America-based providers of semiconductor manufacturing
equipment saw $79 worth of orders received for every $100 of product
billed for in May. Bookings for the month declined year over year for
the first time since 2005.
Worse in Europe, though.
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