Econ, Earnings Numbers End Up Worse Than Expected

The Bank of England pulled off a stunner by cutting interest rates 150 basis points to 3 percent. The European Central Bank cut by 50 basis point and the Swiss cut rates by 50 basis points.

The most important fact about the economic and earnings data in the past couple weeks is that it has generally been worse than the already lowered numbers predicted. We have seen this again this morning, with the exception of the Productivity number.

Retail sales. Last week analysts began furiously cutting estimates on October same store sales. Today, with a few exceptions (Like teen retailers Bucket and Hott Topic), retail sales are below expectations.

Limited,for example, was expected to have sales down 6.2 percent, but it came in down 9 percent.

A few even reported double-digit declines: Abercrombie (down 20 percent), Gap(down 16 percent), Talbots(down 13.9 percent), Nordstrom (down 15.7 percent).

Even discounters were not exempt. Costco saw sales DECLINE 4.3 percent, where a gain of 1 percent was expected, and Targetwas down 4.8 percent, below expectations.

Wal-Martdid see sales up 2.4 percent, better than the expected 1.6 percent gain. U.S. comparable store sales for the four-week November period are expected to be between one and three percent.

Company earnings/guidance disappoints as well. After the close, several companies confirmed that business slowed significantly in September and October.

1) Overseas, downbeat earnings reports from Toyota, Axa, and Adidas. Toyota was talking about the biggest profit drop in 18 years, and noted the recent strength of the yen was also eroding overseas profits.

2) Cisco saw a 9 percent decrease in October orders year over year. On the conference call, CEO John Chambers said he is now anticipating a decrease in revenue of 5 to 10 percent in the current (second) quarter. Chambers said it was the most difficult time in his career.

3) As if car makers didn't have enough problems, rental car company Hertzreported earnings well below expectations ($0.33 vs. $0.52 expected). Demand for rentals is down, pricing is down, and prices for the used cars are down. The company said it will not meet its guidance and is suspending its guidance. Down 10 percent pre-open.

4) News Corp down 11 percent after the close cut its full year outlook on the strength of the dollar and as advertising revenues continued to decline in the television industry.

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