What The World's Biggest Companies Are Telling Us About The State Of The Economy

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Earnings season is well under way, with nearly a fifth of the S&P 500 having reported their first quarter financial results.Rather than dwelling on company-specific performance, we wanted to see what the world’s largest companies were saying about the big picture.

We dug through earnings announcements, conference calls and presentations to get a sense of how 2012 is shaping up to be for the world.

Alcoa is worried a water shortage will curb westward industrial expansion in China

'In fact, I mean it drives the water scarcity aspect further in those provinces because the amount of water that you would need for the 10 million tons per annum is equivalent to the water used at about 1.4 million people would need to live to a year....You would need massive investments, you would increase your sustainability issues, granted you have some social returns but I would still call them inferior to what you would get in other industries and you would almost make no improvement on the cost curve. So obviously, it's for China to evaluate whether this is really the right way to move forward, and I think that's exactly what's going to happen.'

Source: Seeking Alpha

McDonald's doesn't think Europe is dead, in fact, it delivered solid first quarter results

'Europe delivered solid comparable sales growth of 5.0% and operating income growth of 4% (8% in constant currencies) for the quarter. Performance in the U.K. and Russia led the segment's sales growth, with France and Germany also contributing. Europe's emphasis on everyday affordability, premium product innovation and restaurant reimaging continued to provide an appealing restaurant experience and contributed to the segment's quarterly results. Ongoing economic challenges and severe weather in February negatively impacted the quarter.'

Source: McDonald's

JPMorgan Chase says it will take two more years to get through the foreclosure backlog, but that the overall housing market is at bottom

Louis Vuitton confirms that the global market for ultra luxury goods is healthy

'The Group continued its excellent momentum at the start of the year with particularly fast growth in Asia and in the United States and good progress in Europe despite the contrasting environment.'

Source: Company filing

Yum Brands says China's growing middle class will hit 600 million in a decade

'Rising incomes are making our brands even more affordable for an increasing number of people, and the consuming class is expected to double over the next 10 years to well over 600 million consumers. With this as an overwhelming macro tailwind, our new unit development will continue at a high rate, and we expect to continue to grow same-store sales.'

Source: Seeking Alpha

Microsoft says businesses are once again investing in IT

'This quarter, businesses continued to refresh their hardware and as a result, we saw healthy growth in business PCs around the world ... Today, approximately 40% of enterprise desktops worldwide are on Windows 7, and we see continued momentum as the remaining desktops upgrade from Windows XP over the next two years.'

Source: Microsoft

CSX says demand for electricity will expand and low natural gas prices are unsustainable

Verizon confirms the end of the old wireline phone business

'And as far as the core side goes, the core is just steady as she goes. It's a declining business. People are moving away from the legacy voice and long distance and moving more into the IP technology.'

Source: Seeking Alpha

American Express says credit quality is the best it has ever experienced, and consumers are borrowing again

'Spending on the American Express network rose 12 per cent, remaining strong throughout the quarter, both in the U.S. and internationally. Credit quality continues to be among the best we have ever experienced, and our lending portfolio continued to grow at moderate levels.'

Source: American Express

IBM warns not to paint European markets with too broad of a brush

'Europe is not just a homogeneous breakdown of countries. In the U.K., we had 10% growth, U.K. That's the 10th consecutive quarter of growth in the U.K. So it's not as if that's 10% on an easy compare. That's 10% on 2 years of real performance out of the U.K. business. So I think they've done a great job. Spain, we had growth for the sixth consecutive quarter. In Germany, we had growth for the second consecutive quarter. On the flip side, we're still down in France and down in Italy, but I think on balance, Europe to me, looks pretty stable.'

Source: Seeking Alpha

Asian consumers are smoking more than ever, and low cost brands are helping fuel that growth

'PMI's cigarette shipment volume in Asia increased by 12.4%, predominantly due to growth in Indonesia, Japan, Korea, the Philippines and Thailand ... In the Philippines, the total cigarette market increased by 7.0% to 25.2 billion units, mainly driven by the growth of the low-price segment and favourable trade inventory movements in March.'

Source: Philip Morris International

Yahoo says users flee websites that don't have personalised content

'I'll never read an article about the New York Yankees. I only care about the Boston Red Sox. So when I visit Yahoo! Sports today, the only thing I actually want to see is Bruins, Celtics and Red Sox. And that's uniquely relevant to me, personalised for me and we ought to be able to do much, much more of that than we've done to this point in time.'

Source: Seeking Alpha

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