As most of you are aware, Alcoa kicks off Q2-08 earnings season tomorrow. It is unlikely that earnings will be increasing other than those involved in commodities, especially energy, metals, and agricultural products. The theme over the next few weeks will reveal a sharp rise in raw material costs, which for the most part have been absorbed and thus the strains on margins. Last week ended Q1-08 earnings season and with a grand total of 4214 companies having reported earnings fell 30% from the same quarter last year. Earnings have shown a consistent trend over the last two quarters to fall as more companies have reported and this is bearish. Looking at past seasons, there was a drop of 57% for final Q4-07 (3900 companies), a 21% drop (4205 companies) for Q3-07 and a 13% jump for Q2-07.

Also, as noted in the article below, pension plans have taken a very large hit over the past year. Since much of this pension fund damage has not made it yet to balance sheets, expect another major stress on future reports.

The G8 intervention this morning only lasted a few hours before the manipulative effects were overpowered. Hopefully for the G8, this was not their best efforts otherwise total mayhem will ensue shortly. Asia is off to a rough start tonight.

Regards - VHF

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Pension plans suffer huge losses

Report says weak markets, credit crunch have drained $280 billion from plans of largest U.S. companies

NEW YORK (CNNMoney.com) -- Falling stock markets around the globe and the credit crunch are putting the pension funds of some of the largest U.S. companies into deeper financial holes, according to a report released Monday.

Since the credit crunch hit last fall, pension plans funded by S&P 1500 companies have lost about $280 billion in assets, according to an actuary at Mercer, a human resources consulting firm.

On paper, the losses from last October tally $160 billion. However, according to Mercer actuary Adrian Hartshorn, the asset losses are closer to $280 billion when pension plan assets and liabilities are considered together. The losses amount to about 7% of a total $4 trillion in pension plan assets.

Companies should be concerned, he said, because - assuming no change in the market - a typical U.S. company can expect their pension expenses to increase between 20% and 30% in 2009. That's due to the higher cost of servicing the pension plan's debt and the smaller return from the plan's assets.

"I think it's important for corporations to be aware of what's going on in their pension plans, as corporations would be concerned when any part of its business is performing badly," Hartshorn said.

According to the report, the total losses on pension assets and liabilities from the last day of 2007 through the end of June has grown to more than $80 billion.

Part of the loss has been reflected in companies' current financial statements, but many losses incurred since the end of 2007 have yet to hit company balance sheets.

The affected pension plans are qualified and non-qualified plans.