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The stock market appears to be retrenching for the worst: another recession. But at the same time, the tone of business – at least for many distributors – seems to be more positive than it has been for quite some time, according to the second quarter MDM-Baird Benchmarking Survey results.
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"There's absolutely a disconnect," says David Manthey, senior analyst with Robert W. Baird & Co. "…The weaknesses we're seeing in the stock market today is not really reflective of what's going on on Main Street today."
Part of the issue is that the stock market is a predictive mechanism, Manthey says. It's not trying to say what's happening in business today; rather it's looking at what is expected to happen three or six months down the road.
That said, "Uncertainty is the word of the month so far," Manthey says. Companies that normally would have provided clear guidance in their recent quarterly investor calls either didn't or provided wider ranges. But they still said business is going well. Indeed, many distributors reported double-digit or high single-digit growth in the second quarter over last year.
As for that potential second recession?
"The magnitude of the decline we've seen in the stock market in some circles might imply that a recession is looming," Manthey says. "But given the companies we've talked to, even with limited visibility, that seems a little extreme at this point."
Hear more from Manthey on the second quarter benchmarking survey results and the current tone of business in this interview
with MDM by clicking the play button below.
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