Tuesday, April 21, 2009

Stocks Rally, But Recovery Still Not Here

Lots of speculation out there right now. The financial stocks are trading in wild swings as we sift through earnings season. We've heard from Washington that there are "signs the slowdown is stopping" or there are "glimmers of hope" for the economy in 2009. That may be true, but I'd rather look at the numbers. The big time US industrials usually tell the economic tale. I'm seeing weak results from Caterpillar, which I already wrote about today. We also have weak results from Dupont. Here's what Barron's writer Bob O'brien said about this:

Dupont has long been considered one of the classic early-cyclical bellwethers for the global economy. If conditions start to get better - in the auto business, electronics, farm economies - it’s going to show up on DuPont’s books before it shows up in the industrial production data the government puts out.

Based on the first-quarter results the chemicals maker put up Tuesday, the economy hasn’t turned as yet. The company a steep year-over-year decline in earnings, coming in at 54 cents - two cents ahead of estimates, but 59% below year-earlier totals, as revenues dropped 20%. For the second consecutive quarter, DuPont reduced its outlook for the year, now pegging the earnings at a range of $1.70 to $2.10 - as much as a buck a share below what it had talked about at the start of the year.

United Technologies, however, did find some strength in one area:

"The good news is that while order rates continue to be down, there are signs of stabilization in the order rates, particularly in China, which is starting to see the early benefits from the stimulus program there," said Chief Financial Officer Greg Hayes on a post-earnings call."

Well, there's China again. They seem to have a stimulus plan that is well-targeted. Maybe its time to look into putting some money there.

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