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While we have been cautious about the global economy and its impact on corporate earnings, stock markets had been ignoring those risks as investors focused on supportive low interest rates from central bankers and continued optimism about a reduction in trade tensions between the U.S. and China. Our view has been that weaker third quarter corporate earnings reports would finally start to put some dents in that bullish view. While the initial reports from the major U.S. banks were actually a little better than expected, the more cyclical company reports were not so optimistic. Weak earnings and outlooks came from major players such as Caterpillar, 3M, Boeing, Texas Instruments, IBM, Fedex and even ‘perennial favourites’ Amazon and Netflix. To our surprise, though, almost all of those stocks finished higher the day they reported, even after initial sell-offs. How about the biggest tech giant of all, Apple Inc? Profits fell 3%! The stock rallied afterwards as that topped expectations, but it also marked the first time since Chief Executive Tim Cook took over in 2011 that Apple’s profit has declined in all four quarters of a fiscal year. Revenue and profit for the fiscal year through September were both down, for the first time since 2016. (more…)