Never mind the influence of CEOs, political leaders, military generals, the head of the Federal Reserve or the top economists in the academic world.
If you read the financial media like I do for a living, you can logically conclude that the most powerful and important people in the world are Wall Street analysts.
In the auto industry, analyst expectations now preside over the results of every major automaker around the world. The automakers, dealer groups, suppliers and the industry as a whole must answer to this all-powerful and unquestioned group.
And I'm not just talking about quarterly financial results, which have been dominating the news the last few weeks as companies report first-quarter statements. Analyst expectations are deemed relevant to monthly auto sales results as well.
Back in the old days — say, 10 years ago — companies often were judged on their results year-over-year. Increased profits were good. Declining profits or losses were bad. Today? Not so much.
Sometimes an objectively good financial performance results in bad news for a company that doesn't quite meet analysts' expectations. And other times an objectively negative performance, or even a loss, might be viewed positive because the company didn't do as bad as analysts had predicted.
And sometimes, even if the company actually does top the forecasts, it had better keep analysts bullish looking forward, too.
GM -- by most objective measurements, even from analysts -- reported a solid first-quarter profit of $1 billion. It beat analysts' expectations by 7 cents a share (Wall Street's Holy Grail of measuring profits). Yet the company didn't provide enough happy talk about future profits this year, so analysts expressed disappointment, and the market whacked the shares down 2.4 percent.
I realize there needs to be independent measurements of corporate performance, and many analysts are excellent at their jobs. And strictly for Wall Street investors, these analysts by-and-large do what they're supposed to do.
But there are many different constituencies in the auto industry and in American business as a whole. And they all view corporate performances from far different perspectives than Wall Street analysts and investors.
I take issue with how important "analyst expectations" have become in everyday news coverage. Wall Street analysts/investors may have views that are completely opposite to others, such as retail dealers, employees, consumers or anyone else with a stake in the auto industry.
We here at Automotive News use respected wire services such as Reuters and Bloomberg knowing they emphasize analysts' expectations. But we also view this as only one way to define success or failure in our industry. For our audience, we think it's important to temper the influence of these measurements and try to make the coverage relevant for all industry stakeholders.