Earning with a Smile

So what’s going on with the economy? Inquiring minds want to know.

One way to look at how the economy is doing is to look at much companies are earning. We’re fortunate in the US because our largest employers need to report how they’re doing four times a year. We’re almost through earnings season. How’d we do?

The headline doesn’t look great. With three fourths of US companies reporting, earnings are down about 12%. But if you exclude banks and brokerages, earnings are up about almost 9%. And the non-financial companies that lost money were mostly builders

So what does all this tell us? Apart from the bursting of the housing bubble, the economy is doing just fine. If the banking system doesn’t melt down — and so far the Fed has done pretty well helping us avoid that—we should be in for better times ahead.

Douglas R. Tengdin, CFA
Chief Investment Officer
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