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Euro Crisis Hits Global Profits, Says Bloomberg, but June US Tax Collections Hit Four-Year Record

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While the media touts the falling sky, the facts say something different.

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Bloomberg says that global corporate profits are being hit by the euro crisis. Maybe so, but second quarter corporate taxes in the US hit a four-year record.

Europe's debt crisis is putting pressure on corporate earnings globally with companies from Procter & Gamble Co. (PG) to Danone (DANOY) cutting forecasts and signaling profits will fall at more companies this year.

Analysts predict members of the Standard & Poor's 500 Index in the US will report a 1.1 percent average drop in second-quarter earnings, after estimating a gain as recently as last month, according to data compiled by Bloomberg. That would be the first decline in 11 quarters after a 6.2 percent average increase in the first quarter. A stronger dollar is another threat to earnings as US exports become more expensive.

If corporate profits are falling, it has not happened yet, at least as far as US base multinationals are concerned. June corporate tax collections for Q2 2012 are the highest they have been in four years, beating 2011 by a healthy 9.2%, and that doesn't count late filers for the remainder of the month after the June 15 deadline. By month's end, the gap should be 10% or more. So while the media touts the falling sky, the facts say something different.

Maybe the sky will fall, just not yet.


Editor's Note: Lee Adler is a financial markets analyst based in Florida. This article originally appeared on his website, The Wall Street Examiner.

Twitter: @Lee_Adler
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No positions in stocks mentioned.

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