Home Topics in Depth Economics It's a Moment of Truth for U.S. Companies

  • Purveyor (2634 posts)
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    It's a Moment of Truth for U.S. Companies

    by Oliver Renick
    February 13, 2017, 12:56 PM ESTFebruary 13, 2017, 3:21 PM EST

    Say what you will about Donald Trump’s economic prescriptions, it’s hard to argue he hasn’t been a boon for corporate sentiment. A looming question for investors is how that buoyancy will translate when it comes to business spending.

    Cheerfulness is spreading — literally. Executives used the word “optimistic” on a record 51 percent of earnings calls this quarter, according to an analysis by Bank of America Corp. that goes back to 2003. They described things as “better” more often than “worse” or “weaker” at the highest rate in two years.

    Other measures of corporate mood turned north since Election Day. The National Federation of Independent Business’s index jumped 7.4 points last month to 105.8, the biggest gain since 1980. Fourth-quarter earnings guidance showed signs of life, with the tally of companies raising 2017 forecasts outnumbering those that cut by the most since 2011 at this time of the year.

    A logical question is whether improving psychology might lead S&P 500 companies to stop blowing all their cash on buybacks and dividends and start plowing it back into plants and equipment. Morgan Stanley says it might. An index it compiles tracking the three-month average of capex plans in Federal Reserve surveys climbed in January to hits highest level since 2001.

    more…

    https://www.bloomberg.com/news/articles/2017-02-13/everyone-s-optimistic-on-earnings-calls-as-capex-hopes-revive

    Mom Cat, zoolook67, snot like this

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7 replies
  • snot (653 posts)
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    1. Unless they plow it back into wages,

    it won’t help most of us.

    There is no responsibility, without freedom; no freedom, without power; no power, without knowledge; no knowledge, without love.
    • zoolook67 (547 posts)
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      2. Right on, snot. But they probably won't.

      So, in the end, their “exuberance” will prove to have been “irrational”, imo.

      Living well is the best revenge.
      • snot (653 posts)
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        7. Agreed.

        There is no responsibility, without freedom; no freedom, without power; no power, without knowledge; no knowledge, without love.
    • Art from Ark (1961 posts)
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      5. They'll plow it back in to bonuses

      and dividends. And maybe a few stock buy-backs.

      The last time America was run like a business, we ended up with a Great Depression.
  • libodem (985 posts)
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    3. Tourism is down since the Ban

    Seems like it makes the US unpopular.

    Trump’s travel ban is causing a large drop in US tourism – The Boston Globe

    http://www.bostonglobe.com/lifestyle/travel/2017/02/14/trump-ban-causes-tourism-drop-and-industry-fears-lasting-effect/yzMAVzeLvqywP8gEekoFsL/story.html?event=event25

    • Art from Ark (1961 posts)
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      6. Meanwhile, tourism is up here in Japan

      which is becoming a tourist-friendly country. At some stores, tourists don’t even have to pay the 8% sales tax.

      The last time America was run like a business, we ended up with a Great Depression.
  • mmonk (654 posts)
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    4. There's a little thing called demand.