Companies Not Seeing A Recession: EWZ, F, GM, MAR, MON

Many pundits are loudly proclaiming that a recession is unavoidable in the United States. Despite the prominence that these predictions are given in the media, a number of public companies seem to be defying this forecast, and seeing strong results and demand for products and services.

Business Travel
Marriott International (NYSE:MAR) reported an upside earnings surprise, and strong demand in the most recent quarter. The company said that revenue per available room (RevPAR) was up by 8.7% worldwide, in the third quarter of 2011 and by 6.9%, in North America. The company also guided 2012 worldwide RevPAR growth to a range from 3 to 7%.

Auto Sales
In September 2011, new automobile sales in the U.S. rose 10%, as consumers seemed unconcerned with the dark economic clouds on the horizon. The increase was led by three domestic car companies, with Chrysler leading the pack with a 27% increase for the month.

General Motors (NYSE:GM) reported a 20% increase for September, and said that it expects full-year industry sales in the U.S. to be at the lower end of the company's guidance of 13 million to 13.5 million vehicles. This forecast implies that demand will increase in the final quarter of 2011.

Ford (NYSE:F) trailed behind Chrysler and General Motors, and reported that sales were up by 9% in September. (For help on valuing auto stocks, see Analyzing Auto Stocks.)

Monsanto (NYSE:MON) reported a strong upside surprise on the top line, reporting $2.2 billion in sales for the fourth fiscal quarter, compared to consensus estimates of $1.89 billion. This report was not that reassuring for U.S. economic growth, as the company attributed the stronger sales to higher demand from Latin America. During the conference call, the management of Monsanto said that "Brazil and Argentina will be one of the single largest sources of new growth in the next few years."

Investors who want to invest in this growth should take a look at an exchange traded fund that tracks the performance of markets here. The iShares MSCI Brazil Index (NYSE:EWZ) seeks to replicate this index and invests 95% of its assets in stocks listed on exchanges in Brazil.

Perception and Prominence
So what's really going on here? There is a perception held by the general public and media that the stock market is a perfect mechanism for detecting trends in the economy; a modern day Delphic oracle that can see into the future with uncanny accuracy.

The public also pays more attention to the stock market, as it has become more important on the balance sheets of the American people over the last thirty years. In 1980, only 13% of the public owned stocks directly or through mutual funds, compared to 54% in 2011.

The Bottom Line
Economist Paul Samuelson is credited with the saying that "the stock market has predicted nine out of the last five recessions." Investors should take this quip to heart and not give much credence to short term stock movements, as the track record of the stock market in predicting economic activity, is not very good.