Earnings Season Off To Dismal Start: Warnings, Guidance Cuts, Mass Layoffs

Earnings season has yet to officially begin when the big banks report next week and it already looks like Wall Street is in for a rude awakening when it comes to corporate profits in both the last quarter of 2018 and the rest of 2019 just one quarter after the best earnings season in history.

The recent warnings, guidance cuts and layoff announcements to date have been nothing short of dismal. Here is a quick summary of what we have observed in just the last week:


  • Apple cut revenue guidance (for the first time in 16 years)

  • Macy's cut profit guidance, sending its shares plunging the most on record

  • Barnes and Noble cut profit guidance

  • FedEx cut profit guidance

  • American Airlines cut guidance

  • Delta cut profit guidance

  • Kohl's reported a plunge in comp store sales

  • Ford announced it will cut thousands of jobs in Europe

  • Jaguar announced it will cut 10% of its workforce

  • Blackrock announced it will cut 500 jobs

  • State Street announced it will cut 15% of its senior management

  • AQR announced it will cut dozens of jobs

  • United Technologies ended sale of Chubb fire-safety as bids were too low.


Virtually every single sector is telegraphing weakness, from transports to techs to autos to retail and finance. Here are some additional details courtesy of Bloomberg:

Transports

The outlook for the U.S. airline sector darkened notably as economic uncertainty threatens demand. American Airlines cut its estimate for a key gauge of pricing power on Thursday after a similar move by Delta at the beginning of the year. And that was before accounting for a partial government shutdown in the country.

Carriers also see a far bleaker 2019: FedEx cut its outlook a few weeks ago - just three months after raising it - reflecting an abrupt change in its view of the global economy. CEO Fred Smith cited trade tensions, especially between the U.S. and China, among its troubles, saying most of the problems he faced were due to “bad political choices.”

Cars

The first drop in Chinese passenger auto sales is reverberating across the globe as the gloom in the auto industry spreads, and within hours on Thursday, Jaguar and Ford Motor Co.announced major cost-cutting programs. Ford took the most aggressive action in Europe, warning it could close plants and fire thousands. It was followed by Jaguar, Britain’s biggest carmaker, which disclosed a plan for 4,500 layoffs, about 10% of its global workforce. The culprits, according to Jaguar: Brexit, flagging demand for diesel-powered vehicles and a downturn in China.


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