Based on first-quarter trends, the 2001 default ratio, a measure of corporate financial weakness that divides defaults by the number of corporate debt issuers, would be the worst since the 1991 recession year.
Conversely, if a bullish case for stocks based on a continuous decline in interest rates were to be made, one would have to assume that a further fall in interest rates could occur only in an environment of additional economic and corporate profit weakness.
"Board unresponsiveness, sometimes tied to corporate governance weaknesses, demonstrates the need for shareholders to have a more meaningful voice in the proxy process," he said at the time.
But administration officials reiterated their call for an immediate package of new and accelerated tax cuts, saying the economy still faced problems, including economic weakness abroad, weak corporate profits and the possibility of a recovery, similar to the one after the last recession, in 1990-91, in which the unemployment rate remained high for months or years.
Further erosion in corporate profitability and continued weakness in capital markets could mean the banks will see a quarter of lackluster revenues.
In one, Washington presents a unified front on Iraq while new revelations of corporate malfeasance and economic weakness trigger new rounds of selling on Wall Street.
Major indexes are likely end 2001 below where they started, and there is still concern that current stock prices are too high given the weakness in corporate profits.
Citing weakness in corporate tax receipts, the Congressional Budget Office lowered its forecast for this fiscal year's federal budget surplus to $275 billion, $6 billion below its January estimate.
However, that rosy view is being somewhat undermined by the recent weakness in corporate profits.After plunging in 2008, profits rebounded strongly, hitting their highest levels as a proportion of GDP since the second world war.
The shares began trading on the last day of a week in which markets cascaded lower on worries over corporate accounting scandals, the weakness of the economic recovery and the threat of new terror attacks.
