I want to tie a few threads together regarding the synchronised global slowdown and the related drop in corporate earnings. US firms had been insulated on earnings due to not increasing staff and the global nature of their profiles. With economies now slowing globally and the US dollar rising, that spells bad things for earnings. I can't see stocks performing well in a recession with that backdrop.
The first thing to note, however, is that a drop in earnings does not necessarily imply a drop in share prices, although it should. For example, late last month, US corporate earnings were reported to have actually shrunk in Q1 2012.
Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $6.4 billion in the first quart...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.