Michael Santoli

  • No, business capital spending isn't set to take off

    Michael Santoli at Michael Santoli2 yrs ago

    It probably makes sense that the stock market took the surprisingly weak first-quarter economic-growth estimate in stride.

    But the longer-term failure of corporate capital spending to accelerate, despite record company profits and years of under-investment, should give pause to those many investors who have been banking on such a capex revival to justify 2014 growth estimates, earnings projections and stock-price targets.

    Investors collectively seemed to determine that the scant 0.1% expansion of the U.S. economy to start the year, far short of the 1.1% forecast, was in large part due to the messy winter weather that's gotten so much attention (even though the weather trend from January to March was  already known to forecasters).

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