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Illustration: Annelise Capossela/Axios

Big companies continue to misread how global supply chain issues will affect business. One company just admitted it was too optimistic about its forecasts.

Why it matters: Better-than-expected earnings have helped drive stock prices to new record highs.

  • However, more warnings that the business outlook is worse than expected could start sending prices in the opposite direction.

Driving the news: Paint and specialty coatings giant PPG Industries on Tuesday warned that its Q3 sales would be $225 million to $275 million below what it had expected during its July 19 earnings announcement.

  • Management blamed commodity supply disruptions, equipment parts shortages including semiconductor chips, and transportation issues across the U.S., Europe and China.
  • Raw material cost inflation is expected to be higher than previously anticipated. Additionally, management cautioned that the company “continues to assess the full impact of Hurricane Ida, which could include additional supply chain effects.”

What to watch: The challenges PPG identified aren’t company-specific. Rather, they are external factors that are likely to impact other companies.

What they’re saying: David Bahnsen, chief investment officer at The Bahnsen Group, tells Axios that he doesn’t expect too many more companies to cut their forecasts. But he does expect fewer companies to announce better-than-expected earnings when they announce Q3 results.

  • “There is no question that with fewer earnings upside surprises than the past two quarters saw, the outlook for companies in the aftermath of their own announcements becomes more Darwinian,” he says.

The big picture: It’s worth noting that PPG’s warning is due to limited supply, not weaker demand. The silver lining to the company’s warning is reflected in its statement that “aggregate global economic demand remains robust.”

  • “When supply conditions normalize, the company continues to expect strong sales growth into 2022,” the company said.

Go deeper: Deconstructing August's disappointing jobs report

Go deeper

Sep 18, 2021 - World

"Quad" countries to discuss microchip supply chains during summit

President Biden (left) and U.S. Secretary of State Antony Blinken participate in a virtual meeting with leaders of Quadrilateral Security Dialogue countries March 12. Photo: Alex Wong/Getty Images

President Biden, along with leaders from Japan, India and Australia, plan to work on building secure semiconductor supply chains when they gather for their first in-person summit in Washington this week, Reuters reports.

Why it matters: Elevating the "Quad" countries is a key aspect of Biden's strategy for competing with China, Axios' Dave Lawler reports.

Pelosi's back-to-school math problem

Illustration: Sarah Grillo/Axios

House Speaker Nancy Pelosi (D-Calif.) may need votes from an unlikely source — the Republican Party — if she hopes to pass the bipartisan infrastructure bill by next Monday, as she's promised Democratic centrists.

Why it matters: With at least 20 progressives threatening to vote against the $1.2 trillion bipartisan bill, centrist members are banking on more than 10 Republicans to approve the bill.

By the numbers: Haitian emigration

Expand chart
Data: CBP; Chart: Sara Wise/Axios

The number of Haitians crossing the U.S.-Mexico border had been rising even before their country's president was assassinated in July and the island was struck by an earthquake a month later.

Why it matters: A spike during the past few weeks — leaving thousands waiting in a makeshift camp under a bridge in Del Rio, Texas — has prompted a crackdown and deportations by the Biden administration.