PowerTrend Brief: Data and Company Commentary Reveal that Growth Continues to Slow

Chris Versace

Chris Versace is a financial columnist and equity analyst with more than 20 years of experience in the investment industry.

With a handful of trading days left in April, it appears the month will be the first down one for the market, as measured by the S&P 500, since last November when that index dipped less than 1%. Despite headlines about earnings beating estimates in the last few weeks from the likes of Caterpillar, Honeywell, General Electric and Boeing, not to mention dividend hikes from Parker-Hannifin, Pfizer, Coca-Cola, 3M and more, these positives are being overshadowed by recent economic indicators and company commentary that point to slowing demand. Those indicators point to a reversal from the economic growth they showed this past January and February on the domestic front.

In the last few weeks, we have learned of softer manufacturing data from a number of the regional Federal Reserve banks, which was echoed in the steep drop in March Durable Goods Orders. The data, in the form of housing starts, new home sales and existing home sales in March, points to a far weaker housing market than was thought just a few weeks ago. A confirming sign on the housing market can be found in the Mortgage Bankers Association Weekly Mortgage Index, as refinancing activity has been responsible for more than 70% of mortgage applications over the last several weeks.

The recent domestic data likely will result in economists adjusting down their gross domestic product (GDP) forecasts for the near-term, particularly when they factor in the impact of slower growth in China and continued weakness in the euro zone. All of this is occurring while other data released this week reveals that the United Kingdom has entered its first double-dip recession since the 1970s.

To me, confirming signs of the slowdown can be found in the commentary from heavy equipment manufacturer Caterpillar and heavy- and medium-duty truck manufacturer Paccar (PCAR). Despite delivering March quarter results significantly above expectations, Caterpillar modestly bumped its bottom line outlook for the year and maintained its existing revenue forecast, despite delivering 23% revenue growth year-over-year in the March quarter. While Paccar also beat expectations for the quarter ending this past March, weak demand in Europe and eroding domestic orders for the company’s heavy-duty trucks are resulting in production cuts and a 10% workforce reduction at its company facility in Ohio.

While it’s easy to get caught like a deer in the headlights, there are companies that continue to deliver and those that are transforming their business models. One example is Apple, which in lieu of pundit concerns about sequentially down iPhone shipments at Verizon and AT&T, beat expectations handily due to continued demand for its iPhone and iPad offering on a global basis. I chalk this up to Apple leading the way in my Always On, Always Connected PowerTrend.

In terms of a company repositioning itself, one of the better examples is Nestle SA (NESR.DE). While many might quickly think of chocolate, and, yes, the company is still a leading player in that market, in recent years Nestle has been transforming itself into a nutrition, health and wellness company. This week, that transformation continued as Nestle agreed to buy Pfizer’s infant nutrition business. Combining Pfizer’s infant nutrition business, which generates 85% of its revenue from developing countries, with Nestle’s own baby food operations, will result in the combined business holding 10% market share in China, as well as a 38% share in the Middle East and African region. It is a pretty good, strategic move considering the global market for baby food is expected to expand by 10% annually between now and 2016, according to Euromonitor International, with most of the growth expected to come from developing economies. That positioning makes Nestle a company and a stock to watch in the coming months for The Rise and Fall of the Middle Class PowerTrend.

Those are but two examples of the many that are around us — all we need is to know where to look and how to put them into context.

Until next week,


Chris Versace
Editor, PowerTrend Brief

P.S. Because you’re already an Eagle Financial reader, you get the first look at Chris’ brand new research brief… It’s about the multi-trillion-dollar Power Trends that’ll soon rock the market — and how you could leverage them for enormous wealth. Click here, to get started. If you want to read the first newsletter, we will give you a free preview of the inaugural issue.

Next Week

As the onslaught of earnings surges forward, we’ll get more economic data about March and begin to get an initial view of April, including the April Employment Report. Aside from the number of jobs created and the overall unemployment rate, all eyes, including mine, will be on the trend in labor force participation. Aside from job-related data, here’s some of what I’ll be watching next week:

Monday, April 30
Personal Income & Spending (March)
Chicago Purchasing Managers’ Index (April)
Armstrong World Industries (AWI)
Denny’s Corp. (DENN)
Flowserve Corp. (FLS)
Hologic Inc. (HOLX)
Kona Grill Inc. (KONA)
Loews Corp. (L)
Masco Corp. (MAS)
Waddell & Reed Financial (WDR)

Tuesday, May 1
ISM Manufacturing Index (April)
Construction Spending (March)
Amdocs Ltd. (DOX)
Anadigics Inc. (ANAD)
Archer Daniels Midland Co. (ADM)
Broadcom Corp. (BRCM)
Caesars Entertainment Corp. (CZR)
Cavium Inc. (CAVM)
Cummins Inc. (CMI)
Flextronics International (FLEX)
Heartland Payment Systems (HPY)
Office Depot (ODP)
Regal Entertainment Corp. (RGC)
True Religion Apparel Inc. (TRLG)
Watts Water Technologies (WTS)

Wednesday, May 2
MBA Mortgage Index (Weekly)
ADP Employment Report (April)
Factory Orders (March)
Beazer Homes USA Inc. (BZH)
Brookdale Senior Living Inc. (BKD)
Comcast Corp. (CMCSA)
Cooper Industries (CBE)
Garmin Ltd. (GRMN)
Maiden Holdings (MHLD)
The Clorox Co. (CLX)
Visa Inc. (V)
Whole Foods Market Inc. (WFM)
Zillow Inc. (Z)

Thursday, May 3
Challenger Job Cuts Report (April)
Weekly Initial & Continuing Jobless Claims
Unit Labor Costs (1Q 2012)
ISM Services Index (April)
American Tower Corp. (AMT)
AuthenTec Inc. (AUTH)
Cedar Fair LP (FUN)
Corinthian Colleges Inc. (COCO)
Dolby Laboratories Inc. (DLB)
Elizabeth Arden Inc. (RDEN)
Hain Celestial Group Inc. (HAIN)
Lear Corp. (LEA)
Limelight Networks Inc. (LLNW)
Rovi Corp. (ROVI)
Sally Beauty Holdings Inc. (SBH)
Scripps Network Interactive (SEE)

Friday, May 4
Monthly Employment Report (April)
Unemployment Rate (April)
Estee Lauder Companies Inc. (EL)
ITT Corp. (ITT)
The Washington Post Co. (WPO)

Upcoming Appearances

• On Monday, April 30, listen for my weekly appearance on America’s Morning News to talk about the economy, the stock market, stocks and more.

• Please join me for the Las Vegas Money Show, May 14-17, at Caesar’s Palace. To register, call 1-800/970-4355 and mention priority code 026656 or go to ChrisVersace.lasvegasmoneyshow.com.

share on:

Like This Article?
Now Get Mark's FREE Special Report:
3 Dividend Plays with Sky-High Returns

This newly-released report by a top-20 living economist details three investments that are your best bets for income and appreciation for the rest of the year and beyond.

Get Access to the Report, 100% FREE

share on:


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader


Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor