This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Kass: Stunted Growth

This column originally appeared on Real Money Pro at 8:11 a.m. EDT on June 25.

NEW YORK ( Real Money) -- Worldwide growth forecasts are being revised lower.

Indeed, our markets/economy and politicians seem to be operating on different timelines. I had been hopeful that our leaders and policymakers would finally recognize the reduced effectiveness of more cowbell (easing of monetary policy) and that they would at least have started a dialogue on the implementation of pro-growth fiscal policy aimed toward whittling down the fiscal cliff and/or postponing its impact -- all sooner than later in order to prevent a possible adverse and negative feedback loop.

Over there, the worsening sovereign debt crisis, and structurally flawed eurozone continues to weigh on the global economic recovery. Eurozone leaders and central bankers, seeking to seal one sovereign fissure at a time, remain behind the curve but, hopefully, are preparing to catch up and abandon Germany's gradualism as attention is focused on the June 28/June 29 Brussels Summit and the ECB's July 5 meetings.

Consensus Profit Forecasts Are in Jeopardy

With political cohesion absent domestically, U.S. business and consumer confidence has been victimized. In turn, profit disappointments are multiplying and will accelerate further unless our leaders abandon their divisive, divided and dysfunctional behavior. Witness the already weaker-than-expected industrial earnings at United Technologies (UTX), Nucor (NUE), Pall (PLL), FedEx (FDX), Jabil Circuit (JBL), Adobe Systems (ADBE), Autodesk (ADSK), Texas Instruments (TXN) and Cardinal Health (CAH) and the poor results at consumer-based Bed Bath & Beyond (BBBY), Procter & Gamble (PG - Get Report) and Darden Restaurants (DRI - Get Report).

Meanwhile, as mentioned previously, the domestic economic downturn is broadening geographically and the notion of a self-sustaining developed world economic recovery is starting to fade:

  • The U.S. economy still seems capable of muddling through 2012-2013, and real GDP growth seems likely to grow annually at 2.0%.
  • Real GDP growth forecasts for the Chinese economy are estimated at approximately 7% annually over the next two years, but projections have started to waver.
  • Estimates for the eurozone's growth are still -0.5% in 2012 and zero growth to +0.5% next year, but these forecasts are obviously in jeopardy.
  • In total, developing economies are expected to grow by slightly more than 1% in 2012, with some modest acceleration toward 1.5% in 2013, less than half the growth experienced in the last cyclical recovery.
  • In the aggregate, the world's emerging markets are projected to grow by about 4.5% in 2012 and accelerate to 5.0% growth in 2013.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Real Money
Try it NOW

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs