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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

North Texas has a massive housing shortage

North Texas home builders can't build fast enough to meet demand. Photo: LM Otero/AP

Home builders in North Texas are having a difficult time keeping up with the area's massive housing demand, according to a report from Zillow.

  • Fewer homes are selling above list price and homes are staying on the market a few days longer than they did during the summer.

Judge nixes Gulf of Mexico oil leases in climate-focused ruling

Tug boats prepare to tow the semi-submersible drilling platform Noble Danny Adkins through the Port Aransas Channel into the Gulf of Mexico on December 12, 2020 in Port Aransas, Texas. Photo: Tom Pennington/Getty Images

A federal judge on Thursday canceled the Biden administration's late 2021 sale of new oil-and-gas drilling leases in the Gulf of Mexico.

Why it matters: The ruling that the greenhouse gas emissions analysis by the Interior's Bureau of Ocean Energy Management (BOEM) was insufficient is a win for green groups that challenged the decision, as they seek to curb fossil fuel production.

45 million Americans under winter storm watches near New England

Computer model projection showing the winds moving around the powerful East Coast storm on Saturday Jan. 29, 2022. Credit: https://earth.nullschool.net

Nearly 45 million Americans are under winter weather alerts and warnings from North Carolina to northeastern Maine Thursday night, as a major winter storm threatens the region.

Why it matters: It is predicted to be the biggest blizzard since 2018 to strike the Northeast with more than 2 feet of snow possible in parts of eastern Massachusetts, according to the National Weather Service.