It’s easy to be bearish. Not much is going right and prospects for global growth continue to be revised downward. Leaving the eurozone aside for the moment, here is a short and by no means comprehensive list of worries:
- First, the second quarter earnings season is now underway in the US and expectations are, or rather were, at low ebb. The estimates have already been revised up on the back of the few companies that have reported so far suggesting the surprises could be on the upside.
- Second, the closer it gets, the greater it seems to become. Earlier estimates of America’s ‘fiscal cliff’ put it somewhere in the neighbourhood of 3.5 percent of GDP but recent estimates put it nearer 5 percent. Whatever the number, it is large enough to inhibit investment, employment and to create the weakness showing up in the new orders components of recent ISM and Fed regional manufacturing surveys. When CEOs, like Honeywell’s David Cote, writing in the Financial Times, are prepared to raise its profile and urge peers to speak out, there can be little doubt about its adverse influence.