Expanding Profits, Shrinking Confidence...

Two revealing stories in the news...

Investors Punish Expansion Plans - WSJ.com: "Among the lessons from earnings season so far: Now is not the time for optimistic CEOs to tell skittish investors an expansion push is right around the corner.

In a sign that the shell shock from the financial crisis, recession and European sovereign-debt mess hasn't worn off, investors last week punished the stocks of companies that are talking openly about plans to expand..."

The Associated Press: Confidence falls even as corporate profits rise: "The Consumer Confidence Index came in at 50.4 in July, a steeper-than-expected decline from the revised 54.3 in June, according to a survey the Conference Board. The decline follows last month's decline of nearly 10 points, from 62.7 in May, and is the lowest point since February. It takes a reading of 90 to indicate a healthy economy — a level not seen since the recession began in December 2007.
'Consumers have a much different view of the economy than the stock market does, and their views matter more to the economy,' said Mark Vitner, an economist at Wells Fargo. The index 'tells me the economy is heading for slower growth in the second half. We have low expectations for back-to-school.'
Joel Naroff, president of Naroff Economic Advisors, agreed, noting that the fatter profits have shown that companies have been able to squeeze out higher productivity from workers, but that also means that 'households are not benefiting.'
The profit picture is 'good news for Wall Street, but not good for workers,' he added."