Tuesday, January 20, 2015
This is Mark Vickery covering for Sheraz Mian, who will be out of the office until Wednesday.
This morning, the International Monetary Fund (IMF) lowered its global growth forecast by 30 basis points — 3.5 percent from 3.8 percent — which constitutes the IMF’s biggest cut in 3 years. This follows last week’s decision by the World Bank to lower its growth forecast for all of 2015 from 3.4 percent to 3.0 percent.
Clearly these global finance agencies are concerned with the same thing investors have been concerned with since 2015 got underway: lower global growth, led in some ways by plummeting oil prices, resulting in sluggish growth in the U.S. and its markets. Whereas the IMF had earlier considered low oil prices to be a “shot in the arm” for the global economy, now the fund sees China, Japan, the Eurozone and elsewhere as presenting major challenges to overall growth.
The lone exception — among top-tier economies, anyway — is the U.S., on which the World Bank chief economist had quipped, “The global economy is running on a single engine… the American one.” But even here, results looked mixed in Q4 earnings season thus far.
While Delta Air Lines (DAL) continued to ride the fortunes of low jet fuel costs (related to cheap oil) and topped earnings estimates this morning, Morgan Stanley (MS) was light of expectations in the pre-market. Morgan Stanley shares are lower on the major investment firm lowering its compensation ratio in order to bulk up revenues going forward. Johnson & Johnson (JNJ) missed earnings today as well, though Halliburton (HAL) performed relatively strongly, beating estimates. The mixed earnings narrative for Q4 earnings season continues.
Today after the closing bell, Netflix (NFLX) will report its Q4 earnings. The media streaming major now sees plenty of competition in its space, where it had been pretty much a lone entity just a few short quarters ago. Beating on both the top and bottom lines might be just what Reed Hastings’ company needs, especially considering shares of Netflix have tumbled 25 percent over the past 6 months.
Mark Vickery
Senior Editor
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