PowerTrend Brief: Slow Job Creation, Outlook Cuts and More Bad News Ahead

Chris Versace

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

Friday’s job report, which simply was bad in many different ways in my view, capped a quiet week on Wall Street in terms of trading volume, if not data flow. To me, one of the most illuminating ways to look at the recent string of employment reports is to view them on a trailing quarterly basis. When viewed from that perspective, we see that only 225,000 non-farm jobs were created in 2Q2012, down significantly from 677,000 jobs in 1Q 2012. Put simply, the vector or direction and magnitude of job creation is in the wrong direction.

The June Employment report was the latest report that showed a deceleration is occurring in the U.S. economy. Early last week, we learned the manufacturing economy contracted in June, marking the first time this has happened since July 2009, according to The Institute for Supply Management. Add in the string of weaker data on the European and Asian economies in recent weeks and I am surprised that it took even the always “blue skies” International Monetary Fund (IMF) this long to cut its global economic forecast.

Speaking in Tokyo, IMF Managing Director Christine Lagarde said, “The global growth outlook will be somewhat less than we anticipated just three months ago.” While many have their eyes on Europe and its current economic contraction, as well as increasingly on the United States following last week’s dismal indicators, Lagarde correctly warns that Brazil, China and India are showing signs of slower growth, as well. Per IMF data, those three countries, along with Russia, will comprise more than 20% percent of the world economy this year.

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We already have ample proof that the slowing global economy is taking its toll. During the last weeks in June, a number of companies — including Procter & Gamble Co. (PG), Best Buy Co. Inc. (BBY), O’Reilly Automotive Inc. (ORLY), AK Steel Corp. (AKS), FedEx Corp. (FDX), Family Dollar Stores Inc. (FDO) and Nike Inc. (NKE) — have warned of weaker-than-expected results or adjusted their outlooks in a downward fashion. Characteristic of most corporate earnings seasons, the number of reports will trickle in at first but, within several days, become a landslide of companies reporting second-quarter results. If what we have heard thus far is any indication of what is to come, fasten your seat belts. It is going to be a bumpy ride during the next few weeks.

While some investors like to close their eyes and shut their ears once they have made their stock selections, that passiveness is simply foolish behavior. Competitors, customers and suppliers of the companies in which we invest provide timely, crucial information that helps give confirmation or warning when the companies whose shares we own report their results. And that’s just what subscribers to PowerTrend Profits will be getting in the coming days and weeks — the latest readings and insights from the PowerTrend ecosystems. They’ll also be on the front line in breaking economic, demographic, and policy news, as well as how they impact PowerTrend investing.

As we get ready for 2Q 2012 earnings, check PowerTrend Profit out today!

Sincerely,

chris

Chris Versace
Editor, PowerTrend Brief

P.S. Today’s challenging market conditions require even more knowledge than ever for investors and traders like you to keep pace with the latest market intelligence to safeguard your portfolio and to profit from opportunities that only may be available for short periods of time. Join me at this year’s MoneyShow San Francisco, August 24-26, at the San Francisco Marriott Marquis to hear recommendations and advice about how best to profit in 2012 and beyond! Register FREE today by clicking here, by going to ChrisVersace.sanfranciscomoneyshow.com or by calling 1-800/970-4355 and mentioning priority code 027877.

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This Week

Today marks the official start of 2Q 2012 corporate earnings, as Alcoa reports its second quarter results. As tends to be the case, corporate earnings reports will start off with a trickle and build into an avalanche of reports. Even if none of the companies an investor owns is broadcasting its results this week, I find it worthwhile to break down any and all customer, supplier or competitor earnings reports to double check my investing thesis on a company whose shares we have recommended in PowerTrend Profits. There are several such companies and below is a larger list of companies that I will be zeroing in on for one reason or another.

Monday, July 9
Consumer Credit (May)
Alcoa Inc. (AA)
PriceSmart Inc. (PSMT)
WD-40 Co. (WDFC)
Yum! Brands Inc. (YUM)

Tuesday, July 10
Helen of Troy Ltd. (HELE)
SemiLEDS Inc. (LEDS)

Wednesday, July 11
MBA Mortgage Index (Weekly)

Thursday, July 12
Weekly Initial & Continuing Jobless Claims (Weekly)
Fastenal Inc. (FAST)

Friday, July 13
Producer Price Index (June)
Michigan Sentiment Index (July)
Educational Development Corp. (EDUC)
JP Morgan Chase & Co. (JPM)
National Beverage Corp. (FIZZ)
Wells Fargo & Co. (WFC)

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The main U.S stock indexes slumped Friday, after a weak jobs report gave up all or nearly all of the gains during the shortened week. For the week, the S&P 500 shed 0.5% and the NASDAQ eked out a meager gain of 0.1%. The MSCI Emerging Markets Index dropped 0.95%.
 
Your Bull Market Alert portfolio outperformed the broader markets by a country mile. Standouts included Pharmacyclics Inc. (PCYC) up 7.98%; 3D Systems Corp. (DDD)

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