Profit Slump and Recession Worries

Yet in another WSJ article warns of slumping profits increases recession worries. 

 

Worries about profits are spreading to businesses other than financials. 

 

"The recession in reported earnings has already begun," says David Rosenberg, chief U.S. economist at Merrill Lynch & Co. "The underlying cause is a combination of painfully high energy prices and the general lack of pricing power in many businesses, which is starting to crimp margins."

.....

 

Most economists expect things to get worse before they get better. "We're facing a tsunami of earnings downgrades next year," says

Mr. Rosenberg.

 

We have heard the warning from FedEx already.  

 

Richard Berner, chief U.S. economist at Morgan Stanley, expects a "significant and lengthy" contraction in earnings, even if the U.S. economy avoids a recession next year. That's because U.S. companies have far more operating leverage now than at any time in the past.

 

Of course all these stuff doesn't matter to the stock market.  It should be up..up and away as it these should add to the case for a bigger rate cut.