Yesterday was an ugly day for earning reports - spent quite a long time reading through companies reports from sectors across the spectrum, and it was one of the worst days I can ever remember. Bad news and pulled guidance everywhere. As we said in the spring the back half of 2008 earnings estimates was a complete myth - fourth quarter 2008 had been modeled by analysts as having
60% growth over fourth quarter 2007. But that's when "2nd half recovery 2008" folks were tooting their horns by the day on CNBC and a reason 'we should be buying hand over fist'. Notice these people never show up and say "I was wrong with what I predicted in the spring" - they just keep trotting up there with the same dog and pony show. Anyhow, visibility is so poor not only are estimates being slashed, I am seeing guidance completely pulled in sectors you don't normally see. Even for a relative bear like me, it is quite staggering to read all these data points in every sector.
One name I want to highlight is
Arcelor Mittal (MT) which is the world's largest steel maker - obviously
one of these bell weathers on the global (lack of) growth story. I'm not so much interested in numbers but the industry views. This whole pantheon of stocks can only be a very short term trade for now; no investing can be done here -
Jacobs Engineering (JEC) had a great quarter Tuesday - rallied, drew people in with hope - then sold off 15% yesterday for example.
- Shares of ArcelorMittal fell as much as 19% Wednesday after the world's largest steelmaker said it would drastically slash production in the fourth quarter and reported a smaller-than-expected 29% increase in third-quarter profit.
- Net profit for the three months to Sept. 30 climbed to $3.8 billion, or $2.79 a share, from $2.96 billion, or $2.10 a share, earned in the year-earlier quarter. Consensus forecasts were for earnings of $4.01 a share, according to Deutsche Bank.
- The company said it would cut production globally by 30% in the fourth quarter, or twice the rate it previously forecast, as prices decline amid slumping economic growth. The cuts imply a utilization rate of just 65%.
- ArcelorMittal also warned it expects to post an operating profit of $2.5 billion to $3 billion in the fourth quarter.
