America's Biggest Companies Reveal What's Really Going On In The Global Economy

jamie dimon

Photo: MSNBC

Around a fifth of the S&P 500 have reported their third quarter earnings, which means analysts and investors alike are swamped under an avalanche of numbers. EPS have been pleasantly surprising thus far, with 70% of S&P 500 companies beating expectations.While these numbers can serve as measures of past results and indicators of future performance, they often fail to highlight underlying economic and market trends.

So we examined conference calls and independent research reports to bring you market insights for the rest of 2012 and 2013 that can’t be shown with just numbers.

The political landscape, concerns about a slowing Chinese economy, and the growth potential of emerging markets are just a few of the issues on executives’ minds.

Costco says big companies can plan for and manage new healthcare requirements

'Each year for the last two or three years and certainly this year and next year under different parts of the new Healthcare requirements, there's been some additional input numbers into our expense...So we don't think it's going to have a big impact to us like it may to others but you know, others may do some things that may be less of an impact to them. I don't know, but it's fair to say from our perspective, it's kind of been built into our numbers and we've been able to handle it.'

Source: Seeking Alpha

Nike warns that it's getting more expensive to make things in China

American Express notes that China's slowing growth hurts Australia's economy

'...that's probably a reflection of the fact that China is slowing down and Australia's economy has some pretty close linkages to China. So that's the biggest impact that we're seeing that is influencing the slowdown in the growth rate in billings in that region.'

Source: Seeking Alpha

Phillip Morris finds Southern European smokers are switching to cheaper and illegal substitutes

'A key component in the decline of the duty-paid cigarette market in Southern Europe has been adult smokers switching to lower-taxed fine cut products and to illicit cigarettes…the incidence of nondomestic illicit trade for 2012 in Italy is expected to reach approximately 9%, up from an estimated 6.5% in 2011.'

Source: Seeking Alpha

Johnson & Johnson says that Europe's slowest economies are cutting back on healthcare spending

CSX says political uncertainty is preventing companies from executing long-term growth projects

'Eliasson noted that many customers plan for growth 30 to 40 years ahead. However, they are unwilling to execute these plans if they know the regulatory landscape can change in a matter of months.'

Source: Post-earnings phone call

Chipotle warns that drought-related food cost inflation will continue through the end of the year

'The effects of the drought from this summer is going to impact us. It's already starting to impact us in October. We expect to see higher prices overall of in the low-single-digit range moving from the third quarter to the fourth quarter. And then on top of that, we expect to see continued effects from the drought, and the effects are going to be seen in higher dairy prices and higher meat prices.'

Source: Seeking Alpha

Monsanto says commodity food from Latin America will offset the shortfall in the U.S.

'In particular, we expect the continued ramp-up of the corn opportunity in Brazil and Argentina will become one of the single largest sources of growth in the next few years...Corn drives the 2013 opportunity in Latin America, but soybeans will come online over the next few years as a new layer.'

Source: Seeking Alpha

JP Morgan believes housing has turned a corner

Domino's says delivery going digital

'In Australia, 40% of digital orders are now through mobile devices. In the U.K. digital orders are now 58% of delivery sales, with total digital sales up by 39% in the third quarter versus the prior year...About 40% of our delivery orders come through from digital and that continues to grow. Roughly a third of our total orders come through digital channels now. Consumers love our digital ordering, so improving and expanding this ordering platform will continue to be an important focus of our strategy.'

Source: Seeking Alpha

Alcoa notes that the US and European auto industries are telling completely opposite stories

'In the automotive market, we are seeing an increase of 11% to 15% in North America, it's very interesting when the September seasonally adjusted annual sales rate came out at 14.9 million cars, this marked the highest selling rate since March 2008, which is basically plus 15% on a year-to-date basis, that's on top of it, plus 15% we saw on a year-to-date basis compared to 2011...Automotive in Europe continues to decline, we believe at minus 4% to minus 9%.'

Source: Seeking Alpha

Goldman Sachs says politics are driving the markets today

'...there's still so much political uncertainty out there that's driving markets. A speech by politician x or politician y drives markets up or down as much as any economic situation.'

Source: Seeking Alpha

Meanwhile, BlackRock expects politics to drive the markets and economy for years to come

'...we're going to be in an era where politics will intersect with economics. And this is a very large change that we've witnessed in many other markets, and I think this is going to be a part of our markets in the coming years.'

Source: Seeking Alpha

Halliburton says deepwater drilling happening -- just not in the US

'...we successfully executed our first complete well testing and subsea job in West Africa and expanded operations in East Africa with the addition of drilling fluid services on an exploration well for a large independent, offshore Kenya.'

Source: Seeking Alpha

Coca-Cola predicts decreased sales of beverages as China slows

'As we look ahead to the next 6 months, it is reasonable to expect that China's ongoing economic slowdown may have a short-term effect on our industry and on our business.'

Source: Seeking Alpha

IBM notes demand for technology in most emerging markets is robust

'We had double digit growth in Russia, which was up 11%, India up 13% and China up 19%. Brazil, however, was down 3%...this quarter 35 of the growth market countries grew at a double digit rate.'

Source: Seeking Alpha

Cummins warns that the global economic picture in aggregate is deteriorating

Jon Mills, a company spokesman, said 'These actions are difficult and will impact a number of people who have worked for Cummins for many years but are necessary to respond to the current deteriorating global economic conditions.

Intel is sure that the tablet not the end of innovation

'The innovation is going to start pouring in now…things that have sort of the best of both worlds, the performance and the capability of a laptop and the form factor and convenience of a tablet, are likely to be the things that are most high volumes earners.'

Source: Seeking Alpha

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