Corporate Carnage Continues

January 24, 2002 by Phillip Gottelf / Tags: , , ,

I am not inclined to dwell on the subject since I have already covered the economic situation in previous REPORTS.  However, in advance of potential FED inaction the January 24th Wall Street Journal “What’s News” column reads like a corporate earnings obituary.

“Boeing earnings sank almost 80%… Merrill Lynch reported a $1.26 billion quarterly loss…  Corning posted a loss of $655 million… Bethlehem Steel recorded a wider quarterly loss… Caterpillar posted a 37% drop in earnings… Dynegy’s net slid 27%…”

There were some positives for General Dynamic, Halliburton, Pfizer, and DuPont that can be attributed to the “new environment.”  The question is whether the selective survival of some bottom lines will be enough to offset the general economic decline.  After being castigated for a perceived downbeat State of the Economy speech, FED Chairman Greenspan is trying to talk up prospects for a recovery.  Read between his lines and take notice of his body language.  Greenspan is not particularly encouraged about pulling out of a nosedive.

As I have consistently warned, the stock market is far from a recovery.  Each time the DOW Industrials pops above 10,000, it experiences a setback.  Economists are beginning to agree that equities are in a “trading range” between 9700 and 10,300, for the moment.  This being the consensus, investors have returned to U.S. debt as a holding pattern.  This explains the reluctance for longer-term issues to plunge in response to discouraging FED rumblings and the latest jobless data that showed a decrease in filed.

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