LONDON, England - Alcoa, the largest U.S. aluminum producer, has kicked off the first quarter earnings season with a loss of nearly $500 million.
Markets haven't taken the news well. Alcoa is a nasty reminder that the sting of the recession continues to bite. There will be plenty of other reminders.
The U.S. earnings decline has now lingered for six straight quarters and it's not over yet. The expectation is that profits for companies in the S&P 500 will decline for three more quarters including the current one, according to Bloomberg data.
Marc Faber, a well-known analyst, predicted this week that the S&P could go back down to 750 - a fall of some 10 percent from its recent high - before rebounding in the summer.
Even though markets are supposed to anticipate recovery, there are still plenty of reasons to be cautious. Nouriel Roubini, who predicted the economic crisis we are now in, remains bearish, and expects the U.S. economy will continue to contract this year.
And Mike Mayo, the banks analyst, is predicting that loan losses at U.S. banks may exceed Great Depression levels.
Mayo, isn't a household name. But anyone who follows Wall Street closely knows his name well. He's the guy who correctly took a bearish stance on banks in 1999, when others remained bullish.
He thinks mortgage-related losses are only about half way to their peak. While credit card and consumer losses are about a third of the way from their worst levels.
George Soros expressed skepticism this week about whether the market rally had legs, pointing to problems in the real economy.
Soros says recently announced changes to fair value accounting rules will keep problem banks in business, and that in turn will only delay any economic recovery.
Confidence of course, plays an important role in any rebound. It was only a matter of time before the reminders of the depth of this downturn hit investors once again.
Alcoa is the first of those fresh reminders - it won't be the last.
Meanwhile, the problems of the banks persist, and as long as that continues, any real recovery will have to wait.
Do you think the recent rally in the market was a bear market trap?
When do you see the economy rebounding?
How much longer do you think it take to work through problems in the banking sector?
Here are some of the tweets I received following that report "Do You Trust Your Boss...?" survey. You can read about the survey here - http://tinyurl.com/d4vypvAnd remember...some of these responses were tongue firmly in cheek....add your own at the bottom, and watch my Profitable Moment here on the blog.
sunnysandiego – Richard,The reason most people don't trust the bosses is b/c they're sneaky,underhanded, and backstabbing idiots.
vanessa_87 – well, i work for a summer camp in the summer, and my boss is a real cool dude, so yeah i guess i trust him.
adamcobb – They lie to you and do their upmost to screw you over. Why should we trust them?
nickdonnelly – do you trust *your* boss Richard? (I think I know your answer ;)...)
ane76 – hope there is a "do you trust your employees" follow up for us bosses
hammansamuel – .But what if I'm my own boss? Do I trust my boss now???
arunmoola – I dont know if I trust him or not, but I'd like to give him the benefit of doubt
martinpons – depends if the boss trusts me
jeremymonteiro – There is no such thing as loyalty between bosses & employees anymore, only Fairplay, & even that seems to b going out of style
eastcoastjac – I trust my boss completly. Well, he's my husband, so I guess that makes a difrence. But some don't trust their hubbies either.
helevole – loyalty and trust extends only as far as the pay check we are office mercenaries these days
nancygonzalez – Yes, I trust my boss. I can't believe how lucky I am–especially in this job climate. I'd follow her straight into hell.
wordsmanifest – no. at the end of the day work is a transaction, and i never trust anyone holding my money. it'd be the same way vice versa.
88angel – UMM..as far as I can throw 'em and that's not too far! LOL Seriously.Just kidding..I'm my own boss, I trust myself perfectly!
You can add YOURS below
GENEVA, Switzerland – While all eyes have been on London and the G-20 circus, I've been in Geneva covering the 4th Aviation and Environment Summit. For two days, representatives from the biggest airlines and manufacturers down to the smallest support companies in the industry gathered together to discuss their impact on the environment and how to reduce it.
Willie Walsh, center, CEO of British Airways, at this week’s Aviation and Environment Summit.
Just stop and think about that for a moment: big name CEOs from companies who are, in a commercial sense, at war with one another in the battle to win custom, sitting down together to work towards a common goal.
Industry insiders say this is nothing new. Arch rivals have long worked together with regard to safety - and that co-operation has led to a form of transport that is the safest in the world. Now they are using that same co-operative spirit to find solutions to an issue that, like safety, has the potential to damage their industry.
Aviation often gets a bad press for its environmental impact. In the UK in particular there are some very vocal protest groups who do a pretty good job of painting it as the climate-change villain. The public perception is of a self-interested industry that is only concerned with growing passenger numbers and profits.
But as a cynical journalist I have to say that I am very impressed with just how seriously aviation takes its environmental responsibilities. Real, measurable progress has been made and continues to be made as the industry strives to reduce its carbon footprint.
Right now aviation is responsible for between two and three percent of global CO2 emissions. This figure is much smaller than many climate change protest groups would have you believe - but the industry scored a public relations own goal when the climate debate first began as it attempted to fend off criticism by arguing that "it's just three percent."
It now recognises that, however small it may seem compared to other polluters, even this figure is too high, especially given that it is likely to rise as the industry continues to expand.
So, from engines and airframes, air traffic management systems through to innovative recycling programs, efficiencies and emission reductions are being achieved both in the air and on the ground. In the future "bio-fuels" and new engine and airframe technologies offer the potential for carbon neutral air travel.
There are still many hurdles to overcome and the issues affecting the industry as it works towards its "emission free" target are too varied and complex to go into here. (In particular those concerning emissions taxes and the way in which the various trade bodies and government and non-governmental organisations with a vested interest communicate with each other.) But the industry knows that it needs to act quickly and is working hard to overcome potential obstacles to progress.
At the end of the summit I moderated a 90-minute platform debate between six major industry figures. As you'd expect, there was consensus on some issues, a difference of opinion on others. I did, however, manage to get everyone to agree that perhaps now is the time to go on the PR offensive and make sure everyone hears the message that "it's 3 percent. It's too high and we're working damn hard to fix it."
What do you think? Is the aviation industry doing enough to tackle green issues? Or has it unfairly taken too much of the blame? Tell us below.
You can watch my report on the 4th Aviation and Environment summit in the April edition of CNN Business Traveller. You can read more about the summit and the issues at www.enviro.aero. For more on the aviation industry see Business Traveller.
LONDON, England - The protesters at the G-20 summit have been getting a lot of attention by the media. So in that sense, they've accomplished what they wanted. And there seems to be two threads of coverage.
Do those intent on the destruction of banks serve any purpose at all?
One British tabloid ran a headline "BLOOD ON THE STREETS" with a picture of a protester with streams of blood coming down the side of his head.
Another tabloid showed a policeman pushing back a protestor in a large crowd, and it read "ANARCHY DOES NOT RULE UK."
Which headline more accurately reflects the reality on the ground? I would say the latter one.
The police by and large kept the anarchists, as some are called, at bay.
Yes, they did manage to break a few windows at a Royal Bank of Scotland branch - the disgraced bank which has now been nationalized.
Its former head, Fred Goodwin is a much-hated figure for the £700,000-a-year pension he is receiving, despite billions of dollar being spent to bail out the mess he put the bank and taxpayers in.
Some of those who came bent on destruction, no doubt went home grumpy.
One protester, an artist who gave his name as "Morganic" was quoted as saying: "I'd have liked to have seen more smashed windows. I remember the poll tax riots - that was much more fun."
Fun? Perhaps Morganic should rename himself Moronic. Not fun for the taxpayer who's shelling out an additional £7 million or more because of the extra police security.
And not fun for the many small business owners in the area who lost trade as a result of the demonstrations.
Axa, the insurer, estimates the losses could be between £300 million and £500 million - that's upwards of $720 million.
I think one of the ironies lost on these anti-capitalists protesters is the huge benefit that free enterprise brings and the innovation that goes along with it.
All their methods of communicating, be it on their computers, or mobile phones ahead of the protests, would not be possible without technology - technology brought to the masses through venture capitalists or shareholders willing to risk their money to invest in companies.
Those protesting against greedy bankers, or the war in Iraq, or on behalf of climate change, all have legitimate reasons to demonstrate. It's part of a strong democracy.
But for those intent on destruction, for those who didn't have as much fun as hoped, I say good riddance.
Do you think some of the demonstrators went too far?
Do those intent on the destruction of banks serve any purpose at all?
You don't really notice Haruka Nishimatsu when he passes you in the hall. A middle-aged man in a suit, he blends into the working crowd at Japan Airline's headquarters in Tokyo.
JAL President Haruka Nishimatsu, center, shares a light moment in front of a jet engine.
"Why should I stick out?" Nishimatsu says out loud to me.
"Well, you are the CEO and Chairman of this multi-billion dollar international airline," I replied.
"So?" says Nishimatsu. "That doesn't make me special."
That philosophy, that he's just like everyone else trying to make it through Japan's recession, is why he takes the city bus to work, eats in the cafeteria with his employees and strolls through the operations room at the airport. When the company looked to cut costs, he eliminated every single expensive perk of his job. He took away the corner office and chauffeur. Then he slashed his pay dramatically, so that in 2007 he made less than his pilots.
JAL can use every penny it saves. This fiscal year, the airline expects to lose $34 million dollars after passenger traffic fell 20 percent and cargo loads fell 40 percent. It's a global company that lives and dies by the direction of the global consumer and economy.
"I understand there are different conditions in terms of the economy for each country, but I think these economic issues need to be solved globally, rather than solved country by country," says Nishimatsu. "I hope the G20 will give a clear direction to the global economy."
Nishimatsu also believes the solution must begin with the financial institutions and continue to tighter regulations.
But he points to corporate culture as the long-term solution. Like the AIG bonuses, Nishimatsu says, "shocked" him. "It's like they're from another planet," he says.
A lesson of this recession, he hopes, will be that corporations don't solely pursue profit and instead focus on the long-term financial health of the company and employ people and help society. Together with shared sacrifice, he believes, the global economy will recover - but only if everyone from the CEO to the entry-level employee works together.
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