This past week has been a “who’s who” parade of surprise earnings from corporate America. Leaders in all industries have been posting better than expected third-quarter earnings.

The list of third-quarter profit heroes reads something like this:

The Boeing Company (NYSE/BA) went to a profit of 837 million dollars from a loss of $1.56 billion. The world’s biggest aerospace company upped its full-year earnings forecast, which is now expected to double.

eBay Inc. (NASDAQ/EBAY) posted great third-quarter results and raised its forecast for fourth-quarter revenue to close to $2.5 billion. The second most visited e-commerce site is benefiting from stronger consumer spending. The world’s largest computer maker, Hewlett-Packard Company (NYSE/HPQ), surprised on the upside with its earnings and said that it will post revenues close to $134 billion this year, higher than expected.

Wells Fargo & Company (NYSE/WFC) said that it made $3.24 billion. JPMorgan Chase & Co. (NYSE/JPM) reported earlier that it made $4.42 billion, and Citigroup, Inc. (NYSE/C) made $2.17. That’s almost $10.0 billion in profits from these three U.S. banks alone.

American Express Company (NYSE/AXP) said its third-quarter profit jumped 70% to $1.09 billion. Caterpillar Inc. (NYSE/CAT), the biggest maker of construction and mining equipment, saw its third-quarter profit double to 792 million dollars. United Parcel Service, Inc. (NYSE/UPS) saw its third-quarter profit jump to 991 million dollars. The world’s largest restaurant chain, McDonald’s Corporation (NYSE/MCD), saw its profits rise 10% to $1.39 billion. Even that old dinosaur Xerox Corporation (NYSE/XRX) posted a quarter-billion-dollar profit.

I think I’m driving my point home. Profits at America’s largest companies are growing quickly once more. The recession forced companies to trim their payrolls, shred non-income producing divisions and focus back on their core businesses. It’s working. America’s biggest companies are racking up billions upon billions in profits for their shareholders. Each one of the companies I mentioned above beat analyst profit expectations for the third quarter.

And where are the billions in profits going? They’re not going towards buying new equipment or hiring more employees, I can tell you. These companies are either putting the money in the bank or buying back their own stock, because they see their stock as a good deal. Never have American companies been so flush with cash. Companies are as scared to spend the money they’re stashing away as investors are scared to buy their stock.

I like to own stocks when others do not. (Call me a contrarian, because that is what I am at heart.) By early 2009, most investors had given up on the stock market, because they thought the economic world was coming to an end. Investors and analysts were nowhere close to predicting the profits these companies would return to in 2010.

Yes, we have big economic problems. Real estate is a nightmare in America. Our government spends like there is no tomorrow. The U.S. dollar is close to collapsing. But corporate profits, the driver of any stock, are good right now. As America’s economic problems deteriorate further, there is no doubt that corporate profits will come under fire again.

But, for now, as I have been telling my dear readers for months, enjoy the profits and resulting higher stock prices while you can. Ha! Who would have ever imagined that stocks would be a safe haven for capital again?

Michael’s Personal Notes:

Whenever I travel to Europe, I can’t help but think how socialist governments through the years have ransacked the public coffers with outlandish spending, principally overly generous government employee benefits and pay packages.

Most of these European countries have now figured out that if they don’t get spending under control, they could face the next Greece crisis.

France is trying to pass a bill that would increase the official retirement age to 62 from 60. And the unions are in an all-out war against the proposal. About 6,000 gas stations in France (half of the total) are either out of gas or close to it. The unions are blocking deliveries of fuel to the gas stations. Yesterday, popular pop singer Lady Gaga cancelled two upcoming shows in Paris because the trucks carrying her stage equipment may not be able to reach the concert stadium.

What Europe faces today are decades of outlandish and reckless government spending finally being reckoned with. Now if someone could just get Washington to see that socialism doesn’t work, because the more our government spends, the more we are headed down the same wrong path.

Where the Market Stands:

If the term, “riding the wall of worry,” were ever true for stocks, it would be in 2010. The Dow Jones Industrial Average opens this morning up 6.9% for 2010.

The bear market rally that started in March 2009 is alive and well. There are more profits to be squeezed out of this rally.

What He Said.

“I see the coming recession being deep and difficult because U.S. consumers do not have the savings to spend their way out of the recession. The same thing happened in Japan. The Japan example proved that when consumer confidence is shattered, even zero percent interest won’t spur consumer spending. The same thing could happen here.” Michael Lombardi in PROFIT CONFIDENTIAL, August 23, 2006. Michael started talking about and predicting the financial catastrophe we started experiencing in 2008 long before anyone else.

Tags: Dow Jones Industrials, recession, Stock Market Analysis, U.S. dollar