Many companies were citing increased input costs and a new general economic slowdown worldwide because of the eurozone credit crisis as factors that affected their earnings reports.
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New York, NY (PRWEB) February 20, 2012
The stock market had a fantastic January, but, according to Michael Lombardi, lead contributor to popular financial newsletter Profit Confidential, there’s a lot to worry about beneath the surface and the stock market could be in for a sharp sell-off.
Lombardi highlights that, of the companies in the S&P 500 that have released their fourth-quarter 2011 earnings reports, just 46% so far have beat market expectations, the lowest reading since the third quarter of 2008.
“Many companies were citing increased input costs and a new general economic slowdown worldwide because of the eurozone credit crisis as factors that affected their earnings reports,” says Lombardi.
Lombardi now expects that many analysts will start to revise down their S&P 500 earnings for the rest of 2012. He points to the Association of American Railroads (AAR) latest report for January 2012. After experiencing slow railcar growth in the second half of 2011, the AAR saw only 1.1% growth in January, from the same period last year.
“For 2012, the AAR sees a higher rail pricing environment along with higher fuel surcharges on the back of lower volume, which means that the U.S. economy is to remain relatively flat,” says Lombardi.
These are just a couple of the reasons why Lombardi is very wary of the recent stock market climb.
“As I have been writing since 2009, we have simply been experiencing a sucker’s rally within the confines of a long-term bear market,” says Lombardi. “The divergence between earnings reports and stock prices cannot continue.”
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market... before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.