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5 prominent U.S. companies are most at fault for the earnings recession – MarketWatch



With the S&P 500 suffering an earnings recession for the first time since 2017, a few big names deserve most of the blame.

Financial results from the calendar second quarter showed earnings for S&P 500

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 components falling for the second consecutive quarter, a trend referred to as an earnings recession. Profits dropped 0.35% in the second quarter, based on companies that were in the index as of the end of the previous earnings season, following a 0.29% decline in the first quarter.

See more: We are in an earnings recession, and it is expected to get worse

A MarketWatch analysis of FactSet data found that five large companies were the biggest contributors to the earnings recession across the first half of the year: Apple Inc.

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 , Boeing Co.

BA, -0.46%,

Exxon Mobil Corp.

XOM, +0.29%,

Facebook Inc.

FB, -0.49%

and Micron Technology Inc.

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. The reasons for each company’s profit downturn vary, suggesting that the earnings recession cannot be blamed on any one trend that stretches across sectors.

Boeing swung to a steep loss in the second quarter due to the grounding of its 737 Max jets for safety reasons, after two deadly crashes. In addition to taking a financial hit as those planes went out of service, the company announced that it would incur greater production costs for these aircraft. Boeing ultimately reported a net loss of $3.3 billion in the second quarter after it posted a $1.9 billion profit a year earlier, making it the biggest contributor to the decline in the second quarter.

See also: Boeing to see $5.6 billion hit on 737 Max groundings

Weakness in oil prices and across business lines helped drive down Exxon Mobil’s profits for the second quarter, a trend the company expects once again as it prepares to release its third-quarter report. Exxon reported “decade-low chemical earnings” in its last report, according to a Raymond James analyst, while overall earnings tumbled 34%.

While Exxon’s earnings drop wasn’t the largest within the energy sector, the market-cap weighting of the S&P 500 means that the company’s results have a sizable impact on the index’s overall earnings performance. For example, Noble Energy Inc.

NBL, -0.68%

 suffered a 158% drop in earnings for the second quarter, but its result had a comparably minor effect on S&P 500 profits. Exxon is nearly 30 times the size of Noble.

Apple suffers from a similar issue: While it hasn’t been the worst earnings performer within the troubled technology hardware and storage subsector, the company’s gigantic profit totals meant that a 16.4% profit drop in the first calendar quarter of the year was the biggest contributor to the S&P 500’s decline in that period. Apple’s earnings dropped 14.7% overall in the first half of the calendar year, as its strategy of selling ever-more-expensive smartphones faced increased pressure in the latest iPhone cycle, compounded by geopolitical tensions with China.

Opinion: Apple iPhone event reveals a dramatic change in strategy

Facebook and Micron’s earnings slips underscore other problems dogging Big Tech. Facebook absorbed a $5 billion fine in the first half of the year related to a Federal Trade Commission settlement, with the charge split between the first quarter and the second. Though that charge was a one-time issue, the company’s regulatory challenges aren’t going away, and Facebook also faces increased costs as it tries to beef up the safety and security of its platform, a growing problem for social-media players.

Micron’s earnings have remained under pressure amid a chip inventory glut that’s driving down memory prices, after the cost of memory chips spiked in 2018 and sharply boosted Micron’s profit in the previous year. Micron’s earnings declined more than 50% in each of the first two quarters of the year, and it has already pushed the S&P 500 toward a third consecutive quarter of declines by posting a drop of more than 80% late last month.

Read: Semiconductor stocks are poised to benefit as industry sales growth resumes in 2020

Analysts surveyed by FactSet expect an even steeper earnings drop heading for third-quarter earnings results, which begin to flood in this week. Facebook is the only one of the five big contributors that is projected to post a profit increase in the third quarter. Overall earnings for current S&P 500 components are projected to fall 4.88%.

While earnings for S&P 500 companies have declined this year, stock prices have not. The S&P 500 has gained 18.5% so far in 2019, while all five of the largest contributors to the earnings recession have also risen so far this year, ranging from a 1.5% increase for Exxon to a 49.5% gain for Apple.


Fans Celebrate #HOV50 and Share Favorite Jay Z Lyrics on Music Mogul’s 50th Birthday

In honor of Jay-Z’s 50th birthday, fans all across the globe flooded social media with warm messages of love and support.The hashtag #HOV50 began to trend early in the morning on Twitter on Wednesday as a result of the many well wishes from the longtime rappers’ fans.Fans opened up on some of their most memorable…



Fans Celebrate #HOV50 and Share Favorite Jay Z Lyrics on Music Mogul’s 50th Birthday

In honor of Jay-Z’s 50th birthday, fans all across the globe flooded social media with warm messages of love and support.

The hashtag #HOV50 began to trend early in the morning on Twitter on Wednesday as a result of the many well wishes from the longtime rappers’ fans.

Fans opened up on some of their most memorable moments involving the music mogul—whose birth name is Shawn Carter but is commonly referred to by fans as Hov, short for Hova. They also posted messages of the many ways Jay-Z has inspired them, including with hundreds of photos, gifs and video clips of him in action.

Many people used the Brooklyn native’s birthday to reflect on his work over the last three decades, listing their favorite albums, songs and guest features from the rapper.

Fans Celebrate #HOV50 With Song Lyrics on Jay-Z's 50th Birthday
Jay-Z performs on stage during the ‘On the Run II’ tour at MetLife Stadium on August 2, 2018, in East Rutherford, New Jersey. The music mogul celebrated his 50th birthday on December 4, 2019.
Kevin Mazur/Getty Images

Album rankings weren’t the only way fans recognized Jay-Z on his 50th birthday. Several people took to Twitter to commemorate the award-winning lyricist by sharing their favorite verses ever rapped by him. Classic Jay-Z lines from chart-toppers like “Hard Knock Life,” “Song Cry,” “Say Hello,” and his guest feature on Kanye West’s “Diamonds From Sierra Leone” were spotted on Twitter timelines.

Meanwhile, some fans said they’d celebrate Jay-Z’s birthday by listening to his lengthy discography all day long.

Jay-Z made listening to his catalog a whole lot easier for some of his fans when he re-released his entire catalog of music again on Spotify.

“God forgive me for my brash delivery

But I remember vividly

What these streets did to me

So picture me

Letting these clowns nit pick at me” #HOV50

— Syds_Kinda_Vicious (@KindaSyds) December 4, 2019

The Roc Nation founder removed much of his work from the platform in April 2017 to the dismay of many loyal listeners just ahead of the release of his latest album, 4:44.

At the time the move seemed like a ploy to get fans to subscribe to TIDAL, the music streaming service he owns and operates. Now, Spotify users will get to listen to all of Jay-Z’s albums and songs ranging from his 1996 debut Reasonable Doubt and so-called career retirement project The Black Album in 2003, his 2011 Watch the Throne collaboration album with West and several other staples.

Since he first emerged on the rap scene in the 1990s, fans have admired and praised Jay-Z for his many punchlines, thought-provoking lyrics and masterful storytelling. A natural wordsmith, he has kept listeners fascinated and moved with his ability to flow over a beat with grace and pizzaz—not to mention the fact that he creates hit after hit without writing his lyrics down.

It’s a long-known fact Jay-Z doesn’t write his albums but rather hits the studio with a few words already in mind before he jumps on a track. That habit sparked a number of younger singers and rappers following in his footsteps by not pre-writing lyrics to their songs.

“It just felt better [the way I do it now],” he said during a 2007 interview with MTV News. “In my mind, I said, ‘OK, I’m gonna sit down and I’m [going to] just write it and really do this thing a certain way.’ But your natural process is your process. It’s difficult to go back to what you was doing when you was 15, 16 years old. My process is different now. It sounds great on paper, like ‘I’m [going to] sit down, I’m going to write the entire album like I did before.’ But once you get back in the studio and you’ve been doing this process for years and years now, so it just felt natural to do it the way I’ve been doing it: no paper, no pen, just listen to the music.”

See more of how fans are celebrating Jay-Z’s birthday below.

“As a youth explosively, clappin’ off the roof

Shootin’ guard like Kobe, raised up slay smears and bo’e

Back then, Gil was my co-d, Spanish Jose

Showed me how to get the money niggas owed me

Fast forward, no kids, six cars and three Rolies

Two cribs, trips to Cuba” #HOV50

— 💧DRIP DADDY💧 (@_kingdavid) December 4, 2019

Happy Birthday to the best to ever do it!

“I arrived on the day Fred Hampton died, real niggas just multiply!” #HOV50

— Mary O (@LuckeeLefty11) December 4, 2019

“Came through the bushes smelling like roses.” Its been a year OG but you still holding it down. Looking forward to the vision you bring forth this year. Happy birthday #HOV50

— Jael R. Bakari (@thegoofysufi) December 4, 2019

“…I used to think rapping at 38 was ill… but last year alone I grossed 38 mill… I know I ain’t quite 38 but still…the flow so special it got a .38 feel…. the real is back! *Hov Laugh*” #1TakeHov #Hov50

— #StayBlack (@JZFan) December 4, 2019

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Retired Colonel Warns That North Korea Firing Missiles on Thanksgiving Is ‘No Coincidence,’ Criticizes Trump Rhetoric

Retired U.S. Army Colonel Jack Jacobs warned that North Korea’s reported firing of two missiles on Thanksgiving was “no coincidence,” while criticizing President Donald Trump’s claims that the Asian nation will give up its nuclear weapons.South Korea’s military reported that two “short-range” projectiles were fired from what was believed to be “a super-large multiple rocket…



Retired Colonel Warns That North Korea Firing Missiles on Thanksgiving Is ‘No Coincidence,’ Criticizes Trump Rhetoric

Retired U.S. Army Colonel Jack Jacobs warned that North Korea’s reported firing of two missiles on Thanksgiving was “no coincidence,” while criticizing President Donald Trump’s claims that the Asian nation will give up its nuclear weapons.

South Korea’s military reported that two “short-range” projectiles were fired from what was believed to be “a super-large multiple rocket launcher” on Thursday. The missile test would mark the 13th such action by North Korea since May, despite repeated claims by Trump that the country’s dictator, Kim Jong Un, plans to cooperate with the international community and denuclearize.

Asked during an interview with MSNBC if it was a coincidence that North Korea carried out the test on Thanksgiving, Jacobs argued that was definitely not the case.

“No, there’s no coincidence,” the retired colonel, who received the Medal of Honor for his actions in the Vietnam War, said. “Symbolism is very big for Kim. Look, it’s business as usual in North Korea. North Korea’s a continuing criminal enterprise. It’s not going to give up its nuclear weapons, it’s not going to [dis]continue testing delivery systems despite rhetoric, particularly what came from the White House during this administration,” he added.

Kim Jong Un
This picture taken on July 4, 2017 and released by North Korea’s official Korean Central News Agency (KCNA) on July 5, 2017 shows North Korean leader Kim Jong-Un celebrating the successful test-fire of the intercontinental ballistic missile Hwasong-14 at an undisclosed location

“They’re going to continue doing what they’re doing and nothing is going to change. North Korea is not interested in giving up its nuclear weapons,” Jacobs asserted.

Trump, as Jacobs noted, has repeatedly insisted that North Korea will curb its nuclear program and alter its provocative behavior, despite the disagreement of leading foreign policy experts and the assessment of U.S. intelligence agencies. The president has met with Kim directly on multiple occasions, becoming the first sitting U.S. head of state to do so. Trump also became the first sitting American president to step foot into North Korea earlier this year in late June.

Nonetheless, North Korea has failed to take any serious steps to denuclearize and has steadily increased missile tests over the past few months. In a controversial tweet on November 17, Trump responded to North Korea calling Democratic presidential candidate Joe Biden a “rabid dog.”

“Mr. Chairman, Joe Biden may be Sleepy and Very Slow, but he is not a ‘rabid dog.’ He is actually somewhat better than that, but I am the only one who can get you where you have to be,” Trump tweeted, directing the post at Kim. “You should act quickly, get the deal done. See you soon!”

But North Korean Foreign Ministry adviser Kim Kye Gwan dismissed the president’s remarks the next day, saying that the Asian nation was no longer interested in discussions regarding its nuclear program.

Trump and Kim Jong Un
A handout photo provided by Dong-A Ilbo of North Korean leader Kim Jong Un and U.S. President Donald Trump inside the demilitarized zone (DMZ) separating the South and North Korea on June 30, 2019 in Panmunjom, South Korea
Handout/Dong-A Ilbo/Getty

“I interpreted President Trump’s tweet on the 17th to signify a new DPRK-US summit” but “we are no longer interested in these meetings that are useless to us,” Kim said in a statement published by North Korea’s state news agency.

“We will no longer give the U.S. president something to boast about for nothing in return, and we must receive from the U.S. what is corresponding to the results that President Trump is already boasting as his achievements,” the adviser added.

North Korea has previously launched missiles to coincide with an American holiday. In 2017, the Asian nation conducted its first successful launch of an intercontinental ballistic missile on the 4th of July. At the time, state media referred to the test as a “package of gifts” for “American bastards.”

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Business Have Been Practicing Social Responsibility For Decades, But Is That Really A Good Thing?

The jury is out on whether corporate social responsibility (CSR) programs will one day make the world a better place. But this much is pretty clear: They’re already benefiting the companies that have implemented them. And in some unexpected ways.Specifically, CSR has become the weapon of choice for what is known as, in corporate speak,…



Business Have Been Practicing Social Responsibility For Decades, But Is That Really A Good Thing?

The jury is out on whether corporate social responsibility (CSR) programs will one day make the world a better place. But this much is pretty clear: They’re already benefiting the companies that have implemented them. And in some unexpected ways.

Specifically, CSR has become the weapon of choice for what is known as, in corporate speak, the three R’s: Investor Relations, Human Resources, and Public Relations.

But before we dive into details, a CSR mini-lesson is in order. First off, CSR isn’t an overnight sensation. Over the past couple of decades, companies have been embracing the idea that they need to do more than just make a profit for shareholders. Do-good efforts slowly evolved from passive and limited corporate philanthropy programs—giving to the United Way, for example—to broader and more active CSR programs. Those would take on major social issues like Goldman Sachs’ 10,000 Women program, which in partnership with the International Finance Corporation (World Bank) has delivered $1.45 billion in loans to women-owned businesses in developing countries.

Now, they have evolved even more. Many companies are now incorporating impact-on-society considerations into core business activities. For example, Starbucks only uses “ethically-sourced coffee.” Programs like these are often focused on “sustainability.” In August, 181 CEOs of the country’s largest corporations signed a Business Roundtable statement committing to managing their companies not just for shareholders, but also for customers, employees, suppliers, and communities.

Photo Illustration by Ryan Olbrysh for Newsweek; Getty 9; Buzz Courtesy of General Mills, Cesars Courtesy of Caesars Entertainment

The idea behind all of these efforts is the well-worn slogan “doing well by doing good,” which means that being a positive force in the community will enhance a company’s reputation, which in theory will pay off in more sales, lower costs and over the long term, more money for shareholders.

Can you even measure something like this? Stephen Hahn-Griffiths, chief reputation officer of the Reputation Institute in Boston, says you can. He reels off a string of statistics, like “40% of the reputation of a company is related to corporate responsibility” and says his organization’s research proves that reputation is a leading indicator of stock market capitalization, or the total value of a company’s shares. In other words, he adds, “CSR has a multiplier effect” when it comes to a company’s value. But CSR can be risky. And take a little guts.

According to analysts, CVS’s 2014 decision to stop selling tobacco products cost it $2 billion a year in sales and caused the stock price to drop. (Investors took a $1.43 billion hit that year according to Martin Anderson of UNC Greensboro.) In 2010, Campbell Soup announced it was reducing the salt levels in many of its soups, a decision they reversed the following year when sales fell by 32%.

Meanwhile, in 2018, Dick’s Sporting Goods stopped selling assault rifles. On a panel at this year’s Aspen Ideas Festival, CEO Ed Stack said that decision cost them customers and employees. He notes that many of the customers who applauded the decision at the time seem to have forgotten, but those who were in opposition have not. “Love is fleeting,” he says. “But hate is forever.”

But many companies feel the do-gooder dividend outweighs the risks, both in relations with consumers and in day-to-day operations.

Brad McLane, who recruits high-level positions at RSR Partners, says, “Companies aren’t doing it just to say they have it. My clients are incorporating it into how they do business—what ingredients they use, where they source, how they design products.” Megan Kashner, clinical professor at the Kellogg School of Management’s Public-Private Interface agrees. She’s says that we’ve moved from “greenwashing programs that mimic CSR” to an era of “authentic CSR.” Greenwashing is the practice of making misleading claims that make a company appear more environmentally or socially conscious than it is, for example, when BP began touting itself as being environmentally conscious through a $200 million public relations campaign, only to have a string of environmental disasters—some of which, according to a government report, were caused by corporate cost-cutting to boost profits.

BP is the subject of protests by Greenpeace activists over oil drilling in the North Sea.
Christian Charisius/picture alliance/Getty

Simon Lowden, Pepsico chief sustainability officer, says, “It’s woven into how we operate as a business. For instance, we need to maintain our license to operate in water-stressed regions, so we’d better focus on being responsible stewards of water. It’s not only the right thing to do, it’s important to our business.”

CSR is particularly useful in human resources. Rebecca M. Henderson, holds the John and Natty McArthur Chair at Harvard and is finishing a book on this topic, Reimagining Capitalism in a World on Fire. She says: “CSR has a tremendous impact on the morale of employees. Authentic purpose, which may mean occasionally sacrificing profits, accesses a whole range of emotions difficult to get at otherwise, like trust and engagement.”

In other words, it gets through. And that is a good thing. It leads to higher levels of productivity and employee retention.

CSR can also be a big factor in recruiting, particularly for younger employees, says Eric Johnson, executive director of graduate career services at the Kelley School of Business at Indiana University. He says, “Social impact is a big piece of the recruiting process. Probably 50 percent of that initial conversation is about what the company is doing to make the world better.”

“Beer companies used to talk about fun and sports. Now they talk about their programs to save water in the world. Social impact can tip the scales. Is a student going to choose an $85,000-a-year job over a $125,000 job because of social impact? I doubt it. But my observation is that jobs heavy in social impact often pay up to 10 percent less than comparable jobs that don’t.”

Professor Kashner adds, “These newly minted MBAs care and they care about the type of work they’re going to be doing. Maybe previous generations drew a line between work and personal life and values, but those boundaries no longer exist.” Korn Ferry, the giant executive recruiting firm, recently surveyed the professionals in its network. “Company mission and values” was the No. 1 reason (33 percent ) they’d choose to work for one company over another.

CSR is increasingly part of the conversation with individual shareholders and investors, like the world’s largest investment firm, BlackRock, which manages $6.5 trillion dollars for its clients. In his last two annual letters, CEO Larry Fink has called on companies to do more and said that BlackRock will evaluate companies on more than just financial numbers. His 2018 letter said, “As divisions continue to deepen, companies must demonstrate their commitment to the countries, regions, and communities where they operate, particularly on issues central to the world’s future prosperity.” Many investment firms now have someone in charge of building portfolios around companies based on their performance on Environmental, Social and Governance or ESG. (Measuring which companies are woke is an industry in and of itself.)

One aggregator of ESG ratings,, lists 634 data sources. They range from the very broad (for example, Alex’s Guide to Compassionate Shopping) to the very specific (for example, the Alliance for Bangladesh Worker Safety).

For public relations, CSR is both an offensive and a defensive weapon. CSR can be used to pre-empt the conversation in areas where companies have been criticized. Procter & Gamble’s “Ambition 2030 program is heavy on recycling and biodegradability.

A 50-foot cigarette is “snuffed out” by CVS in New York City.
Andrew Burton/Getty

But CSR can also be a useful defense. It not only builds up a stock of goodwill with the media and the public, but it generates good news that crowds out the bad. Large corporations are going to get a certain amount of press and awkward questions each day—better that press and those questions be about CSR than, say, worker safety or GMOs. For example, in 2018 when Johnson & Johnson was accused of knowingly selling baby powder with harmful levels of asbestos, Harvard professor Bill George wrote a stirring defense of the company, focusing not on the merits of the claim, but on J&J’s “Our Credo,” a commitment to integrity and customers written in 1943 (and likely the first CSR document ever produced.)

Still, not everyone is convinced. There are many who adhere to the late economist Milton Friedman’s argument that the sole purpose of the corporation is to make more money for shareholders, who can then choose for themselves whether or not they want to save the world.

Judith Samuelson, vice president of Aspen Institute and founder of their Business and Society Program, who’s worked with many of the companies currently leading the way in CSR, says, “The shareholder primacy viewpoint hasn’t gone away. And even if attitudes have changed, measures haven’t. Many executives, including CEO’s, are still paid in stock, and those who manage portfolios for institutional investors are still bonused on the value of those portfolios.”

Samuelson worries that “Companies may think these (current) programs are enough and not make fundamental change.” Kashner is more optimistic. She cites work that says large public companies are increasingly incorporating CSR metrics into executive compensation contracts.

Those who oppose CSR programs argue that trying to do two things at once, like making a profit and serving society, will destroy the effectiveness of companies.

Samuelson scoffs at this. “Of course companies can do more than one thing. Public companies have to manage multiple objectives all the time. No public company in the world would last a week if the only people they cared about were shareholders. What about customers? Employees?”

She believes that CSR really boils down to responsible decision making, doing what it takes for companies to succeed in the long term. Whatever, CSR is here to stay. It’s become part of the fabric of investing, company operations, and business school curricula.

It’s now being tracked and measured, and in business, what gets measured gets done.

→ Sam Hill, a Newsweek contributor, is an author and former C-suiter.

Business Have Been Practicing Social Responsibility For Decades, But Is That Really A Good Thing?

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