Core earnings have decelerated this year due to higher costs, slower sales and other woes. Strength in the energy sector has offset significant declines in the financial sector. Everything in between is pretty much stagnant from levels of a year ago.
Core profits could keep dripping away. The full U.S. economy hasn’t fully experienced the knock-on effects of the financial crisis and soaring energy prices. The global economy is showing signs of catching a sniffle, if not a cold, from the U.S., which threatens the thus-far-resilient profits of multinationals.
Having learned nothing despite repeated burns from hot stoves, analysts doggedly continue to forecast a stirring earnings rebound in the second half. There’s no reason to believe they’ll be right this time.
Best plan of attack: stay diversified, invest in top notch mutual funds, and use technical indicators and signals to take advantage of some of the inevitable swings we shall see as the market tries to get clarity on where the domestic and global economy is heading over the next 6-9 months.
