Thursday, April 19, 2012

Too early to abandon ship

Things are not looking so good for the home team these last few days, and members of the Red Sox Nation are burning up the sports talk show phone lines as the boys of summer can't seem to get started this year, now showing a losing record. On the 100th anniversary of the Titanic sinking -- and that of Fenway Park, ironically -- the fans are lining the railings ready to abandon ship.

As I listen to callers, who must not be veteran Red Sox fans who have learned to take the good with the bad, I marvel at how quickly they seem to have thrown in the sponge, judging that this will be a losing season, after only a dozen games out of 162.

I'm sensing the same from some of the business media who comment on activity in the U.S. manufacturing sector. For some reason, some scribes seem to be obsessed with recession and downturns. One says the U.S. manufacturing sector is showing signs of vulnerability, citing those pesky housing numbers that seem to upset Wall Street every month. (I commented on this in my last blog.) Others see danger in Europe, trotting out the latest grim news from the International Monetary Fund. Specifically pointing to troubles in Spain, another quotes a banker in that country: "Many people think that austerity is going to make the economic situation worse."

A few pieces of negative information has these writers donning life jackets and climbing over the ship's rail. We are not sinking, guys -- its only three months into the year.

I will say this, however -- while there is cause for concern about the health of the manufacturing economy here in the U.S. and some sectors abroad, there is also a level of confidence among industrialists. Most have their houses in order, having played it close to the vest in terms of staffing-up as the recovery progresses and increasing their capital expenditure budgets. This caution, at that time read by some analysts as negative, is now paying off and these companies are poised to make it through 2012 in good shape, for what many think will be a return to global prosperity in 2013.

Here at ILS I decided on a conservative approach in the 2012 forecast, and took a little heat for a modest single-digit growth in system revenues. I'm tweaking that number by a couple of percent in the mid-year report I will present in a June 12th Webcast. Check for details on this.

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