Corporate Earnings Are No Sign of Recovery
Despite grim predictions, most major U.S. companies have reported positive earnings for the second quarter of 2009. Given how wrong past predictions have been, the fact that earnings have blown away expectations shouldn’t be so surprising. Still, the numbers are genuinely impressive: More than 73% of the companies that have reported so far have beaten earnings estimates—and stocks have rightly rallied.
What’s Good For IBM...
The wreckage of the financial crisis is producing many warnings that globalization is dead, as trade and investment slow. Nothing could be further from the truth. In fact, global companies have rarely been in a stronger position, and if you want to get a sense of where such businesses are heading, look no further than IBM.
At the conclusion of two days of meetings in Washington last week, representatives from China and the United States reaffirmed their mutual commitment to continuing a "Strategic and Economic Dialogue." Yet, constructive rhetoric masked many of the worries each country has about the other one's long-term financial health. China is worried about its investments in U.S. bonds; America is worried that the Chinese economic model is unsustainable; and neither much like the position of mutual dependence. What's more, it's becoming apparent that the two governments are not equally adept at managing their economies, and that the one doing worse is not the one with a disastrous legacy of state-mandated production, but instead the one that until recently was an icon of economic dynamism.