Excerpt from my MSN Money article on the coming week’s earnings:<\/p>\n
How about we play a game, shall we? It goes like this: I say a term and you tell me the first thing that comes to your mind. Ready?<\/p>\n
What do you think of when you hear the word recession? Did you think slowdown or inflation? What comes to mind with the word write-offs? Did you think earnings growth? How about record commodity prices? Do you immediately think of increasing revenues and profits?<\/p>\n
I bet you thought of several phrases and words associated with a general economic slowdown, but not those above. I asked because a curious situation is occurring within our markets. For example last week many of the companies reporting earnings showed an increase in year-over-year revenues and actually beat estimates. Of course this isn’t the norm this quarter, but even so, it is a peculiar occurrence.<\/p>\n
Of course there were also several companies that had their share of difficulty, but it was still odd to see so many results come in better than expected during a time of widespread economic problems. How does that happen? Studies have shown that analysts often overshoot estimates during bullish times and underestimate in bearish environments, but I am really referring to reported revenue, not the estimate. Does that mean companies are actually selling more and taking in more revenue?<\/p>\n