A number of my recent articles have focused on the aggressive expectations for earnings growth over the next couple of years in relation to
expectations for economic growth.
The last time the Bank of Canada made a rate announcement it raised
its expectations for economic growth in its monetary policy report.
Most measures of inflation have decelerated and
expectations for economic growth have softened.
The Federal Reserve is about to transition to new management with already raised
expectations for economic growth next year, signaling relatively smooth sailing ahead.
Indeed, as
expectations for economic growth have been scaled back somewhat in both regions over the past three months, markets have pushed back their expectation of the timing of the first tightening by both central banks.
Here at home,
expectations for economic growth have been cut.
The Bank of Canada announced that they would raise interest rates and had a positive
expectation for economic growth.
Not exact matches
Economic growth well above
expectations could be an issue
for stocks because it increases the chances the Fed will suddenly get more aggressive on rate hikes.
Economic growth well above
expectations could be an issue
for stocks.
U.S.
economic growth and the
expectation for higher interest rates should also give the rally in the dollar more fuel, said Gina Sanchez, CEO of Chantico Global.
A wobbly equity market,
expectations for higher interest rates and weaker
economic growth in the first quarter have inspired some pundits to claim that bear - market risk
for stocks...
Forward - looking statements may include, among others, statements concerning our projected adjusted income (loss) from operations outlook
for 2018, on both a consolidated and segment basis; projected total revenue
growth and global medical customer
growth, each over year end 2017; projected
growth beyond 2018; projected medical care and operating expense ratios and medical cost trends; our projected consolidated adjusted tax rate; future financial or operating performance, including our ability to deliver personalized and innovative solutions
for our customers and clients; future
growth, business strategy, strategic or operational initiatives;
economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas; financing or capital deployment plans and amounts available
for future deployment; our prospects
for growth in the coming years; the proposed merger (the «Merger») with Express Scripts Holding Company («Express Scripts») and other statements regarding Cigna's future beliefs,
expectations, plans, intentions, financial condition or performance.
Figure 1 shows this value - destroying behavior in action
for GE (GE) by comparing between the amount of money spent buying back shares and the price to
economic book value (PEBV), a measure of the
growth expectations embedded in the stock price.
Longer - term rates, often used to gauge investors»
expectations for inflation and
economic growth, remain mostly unchanged from two years ago.
China's
economic growth ticked down to 7.7 percent in the first quarter, falling short of market
expectations and suggesting a tepid rebound
for the economy.
A deal with China to potentially open their economy is very bullish
for oil demand
expectations as well as global
economic growth.
To some extent, stock market action also implies
expectations for slower
economic growth, though interest rate signals, such as a flat yield curve, are more suggestive of slow
growth than stock market action is, and we've yet to see a substantial widening of credit spreads that would suggest imminent recession.
Expectations for strong U.S. jobs data on Friday have been maintaining a bid
for dollars, while timely survey data show that a cooling in
economic growth is afoot, and ECB President Draghi gave dovish - tilting remarks following the central bank's April policy review last week.
The second factor driving volatility is
economic growth, or more accurately,
expectations for growth.
Given the importance of the US
economic outlook
for Canadian exports and Canada's economy more generally, firms in the Business Outlook Survey are asked about their
expectations for US
growth.
Expectations for US
economic growth over the next year are generally positive, although considerable uncertainty surrounds the implications of the US election outcome
for firms» outlook (Box 1).
A wobbly equity market,
expectations for higher interest rates and weaker
economic growth in the first quarter have inspired some pundits to claim that bear - market risk
for stocks has spiked higher in recent weeks.
Proposals
for fiscal stimulus via tax cuts, government spending and regulatory reform have led to
expectations of stronger
economic growth, higher inflation and higher interest rates.
In addition, concerns of slowing
economic activity in China have come to the forefront with industry behemoth Alcoa (AA — Free Alcoa Stock Report), the International Monetary Fund, and mining giant Rio Tinto Group (RIO) tempering
growth expectations for the world's biggest aluminum user.
US economy grew faster than expected in first quarter
For a number of years, first quarter readings of
economic growth in the US have fallen short of
expectations.
Steep yield curves (long - term yields substantially above short - term yields) usually imply
expectations for faster
economic growth.
This spread gives an indication of the market's
economic expectations, reflecting the outlook
for demand
growth, inflation, and Fed policy.
It's interesting to note that on the same day the International Monetary Fund released their annual World
Economic Outlook which lowered
expectations for global
growth in 2015 to 3.8 % from 4 %, that several potentially large mining deals were either launched or mooted.
The report saw investors slash
expectations for a rate hike from the Bank of England at its upcoming meeting next week after overall
economic growth slowed to near stagnation in the first quarter.
The price - to -
economic book value (PEBV) ratio measures the difference between the market's
expectations for future profits and the no -
growth value of the stock.
The difficulty
for the ECB in managing market
expectations on monetary policy in the face of stronger
economic growth was evident elsewhere in President Draghi's remarks, as he repeatedly stressed the need to keep the region's interest rates at current levels while the central bank winds down its QE program.
The current US recovery, which is now tied
for the third - longest on record, has also been the weakest
economic expansion since World War II, with an average annual
growth rate of just 2 % over an 8 - year period.5 It may not take much to derail such tepid
growth, particularly in light of continued high
expectations.
This reflects rising
economic uncertainty and less room
for growth to exceed
expectations.
For one thing, it has created «rising
expectations» about development, faster
economic growth.
For several decades after World War II the
expectation that
economic growth could work this miracle in Third World countries justified devoting all efforts to furthering such
growth.
It was intended that this would be paid
for by increased
growth, but global events (principally the terrorist attacks of September 11) led to an
economic downturn, and those
expectations were not met.
The latest GDP figures, albeit provisional, are expected to serve as an encouragement to government of a rebound in
economic activities, as Finance Minister Seth Terkper in June last year announced to Parliament that government had revised its
expectation of
economic growth for 2015 from 4.1 percent to 3.5 percent.
While no country in history has achieved its
economic growth without causing environmental damage,
expectations for Singapore's mitigation ambition are particularly high because it is a leading figure in facilitating a global climate change treaty.
«The challenge
for the authorities is to balance society's high
expectations for increased
economic growth with new and growing demands
for clean air, water and food.
Such statements reflect the current views of Barnes & Noble with respect to future events, the outcome of which is subject to certain risks, including, among others, the general
economic environment and consumer spending patterns, decreased consumer demand
for Barnes & Noble's products, low
growth or declining sales and net income due to various factors, possible disruptions in Barnes & Noble's computer systems, telephone systems or supply chain, possible risks associated with data privacy, information security and intellectual property, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible risks that inventory in channels of distribution may be larger than able to be sold, possible risks associated with changes in the strategic direction of the device business, including possible reduction in sales of content, accessories and other merchandise and other adverse financial impacts, possible risk that component parts will be rendered obsolete or otherwise not be able to be effectively utilized in devices to be sold, possible risk that financial and operational forecasts and projections are not achieved, possible risk that returns from consumers or channels of distribution may be greater than estimated, the risk that digital sales
growth is less than
expectations and the risk that it does not exceed the rate of investment spend, higher - than - anticipated store closing or relocation costs, higher interest rates, the performance of Barnes & Noble's online, digital and other initiatives, the success of Barnes & Noble's strategic investments, unanticipated increases in merchandise, component or occupancy costs, unanticipated adverse litigation results or effects, product and component shortages, the potential adverse impact on the Company's businesses resulting from the Company's prior reviews of strategic alternatives and the potential separation of the Company's businesses, the risk that the transactions with Microsoft and Pearson do not achieve the expected benefits
for the parties or impose costs on the Company in excess of what the Company anticipates, including the risk that NOOK Media's applications are not commercially successful or that the expected distribution of those applications is not achieved, risks associated with the international expansion contemplated by the relationship with Microsoft, including that it is not successful or is delayed, the risk that NOOK Media is not able to perform its obligations under the Microsoft and Pearson commercial agreements and the consequences thereof, risks associated with the restatement contained in, the delayed filing of, and the material weakness in internal controls described in Barnes & Noble's Annual Report on Form 10 - K
for the fiscal year ended April 27, 2013, risks associated with the SEC investigation disclosed in the quarterly report on Form 10 - Q
for the fiscal quarter ended October 26, 2013, risks associated with the ongoing efforts to rationalize the NOOK business and the expected costs and benefits of such efforts and associated risks and other factors which may be outside of Barnes & Noble's control, including those factors discussed in detail in Item 1A, «Risk Factors,» in Barnes & Noble's Annual Report on Form 10 - K
for the fiscal year ended April 27, 2013, and in Barnes & Noble's other filings made hereafter from time to time with the SEC.
Such statements reflect the current views of Barnes & Noble with respect to future events, the outcome of which is subject to certain risks, including, among others, the effect of the proposed separation of NOOK Media, the general
economic environment and consumer spending patterns, decreased consumer demand
for Barnes & Noble's products, low
growth or declining sales and net income due to various factors, possible disruptions in Barnes & Noble's computer systems, telephone systems or supply chain, possible risks associated with data privacy, information security and intellectual property, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible risks that inventory in channels of distribution may be larger than able to be sold, possible risks associated with changes in the strategic direction of the device business, including possible reduction in sales of content, accessories and other merchandise and other adverse financial impacts, possible risk that component parts will be rendered obsolete or otherwise not be able to be effectively utilized in devices to be sold, possible risk that financial and operational forecasts and projections are not achieved, possible risk that returns from consumers or channels of distribution may be greater than estimated, the risk that digital sales
growth is less than
expectations and the risk that it does not exceed the rate of investment spend, higher - than - anticipated store closing or relocation costs, higher interest rates, the performance of Barnes & Noble's online, digital and other initiatives, the success of Barnes & Noble's strategic investments, unanticipated increases in merchandise, component or occupancy costs, unanticipated adverse litigation results or effects, product and component shortages, risks associated with the commercial agreement with Samsung, the potential adverse impact on the Company's businesses resulting from the Company's prior reviews of strategic alternatives and the potential separation of the Company's businesses (including with respect to the timing of the completion thereof), the risk that the transactions with Pearson and Samsung do not achieve the expected benefits
for the parties or impose costs on the Company in excess of what the Company anticipates, including the risk that NOOK Media's applications are not commercially successful or that the expected distribution of those applications is not achieved, risks associated with the international expansion previously undertaken, including any risks associated with a reduction of international operations following termination of the Microsoft commercial agreement, the risk that NOOK Media is not able to perform its obligations under the Pearson and Samsung commercial agreements and the consequences thereof, the risks associated with the termination of Microsoft commercial agreement, including potential customer losses, risks associated with the restatement contained in, the delayed filing of, and the material weakness in internal controls described in Barnes & Noble's Annual Report on Form 10 - K
for the fiscal year ended April 27, 2013, risks associated with the SEC investigation disclosed in the quarterly report on Form 10 - Q
for the fiscal quarter ended October 26, 2013, risks associated with the ongoing efforts to rationalize the NOOK business and the expected costs and benefits of such efforts and associated risks and other factors which may be outside of Barnes & Noble's control, including those factors discussed in detail in Item 1A, «Risk Factors,» in Barnes & Noble's Annual Report on Form 10 - K
for the fiscal year ended May 3, 2014, and in Barnes & Noble's other filings made hereafter from time to time with the SEC.
The current US recovery, which is now tied
for the third - longest on record, has also been the weakest
economic expansion since World War II, with an average annual
growth rate of just 2 % over an 8 - year period.5 It may not take much to derail such tepid
growth, particularly in light of continued high
expectations.
But even as investors assume slower
economic growth their
expectations for changes in the Fed Funds target rate have gone mostly unchanged.
Interest rates on mortgages are determined by
economic growth and inflation
expectations, two factors that combine to set the supply and demand
for credit.
This reflects rising
economic uncertainty and less room
for growth to exceed
expectations.
High oil prices were one of 2011's main
economic party poopers, prompting many observers to pare their initially high
expectations for growth during the year.
It also says that the recent move up in 10 - year Treasury bond yields has been due to a combination of both increases in inflation
expectations on the back of
economic growth and capacity, as well as an increase in real yields due to a relative shift in the supply and demand
for capital.
So in this viewpoint, climate change and the challenges it presents to the taken -
for - granted
expectations of
economic growth and progress is very similar to the identity threats engendered by the civil rights movement and racism, or feminism and patriarchy.
Under the adaptative scheme, tax rates and technology incentives are adjusted in light of climate damage
expectations,
economic growth, and technology adoption targets; incentives would expire after a period of time
for technologies not making sufficient progress.
Michael # 29, the classical economists of the 18th and 19th centuries (Adam Smith, David Ricardo, Thomas Malthus, John Stuart Mill) all wrestled with the problem of limits to
growth and came up with scenarios
for the human future ranging from extreme pessimism (Malthus) to optimism (John Stuart Mill's
expectation that at a certain stage of
economic development human society would cease to grow in material scale and reach a «stationary state» where the emphasis would be on qualitative human, social and cultural development.