Again, corporate CEO’s appear to be doing an excellent job as the earnings their companies are posting, in general, have been quite good. However, employment is lagging as one of the tricks in the CEO’s bags appear to be cost containment. Frankly, I see nothing wrong with that as Business 101 says add revenue before expenses. But maybe that is a Catch-22 as in order to get revenue up in a consumer driven economy, you need to get the unemployment numbers down.
Regardless, I think the CEO’s will continue to do what is best for their companies bottom line and as investors in publicly traded companies we want nothing more. We can leave it to the leaders at the governmental level to mange the economy as a whole in these “unusually uncertain” times.
All in all, our basic thesis (which we’ve discussed in our newsletters) that earnings should be good but multiples should remain low appears to be playing out. And until the employment numbers get better, this market should be range bound. Therefore, active management just might be the trick to profits in our current environment.
