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Do the Double-Dip Double Take

http://www.fool.com/investing/general/2010/07/02/do-the-double-dip-double-take.aspx

Christopher Barker
July 2, 2010

Like wayward mariners lost in a pea-soup fog, uncertain investors are keeping a sharp ear out for the bells and whistles that will indicate the next way forward for the American economy.

Every available clue is meaningful under the circumstances. Off-cycle earnings reports from bellwether industrial companies Joy Global (Nasdaq: JOYG  ) and Commercial Metals (NYSE: CMC  ) have already provided insightful and timely glimpses of the voyage ahead, and this week steelmaker Schnitzer Steel (Nasdaq: SCHN  ) chipped in with another key snapshot of an economy at a crossroads.

On the surface, Schnitzer's earnings results from its fiscal third quarter portray a bellwether riding a wave of recovery. Consolidated revenue surged 84% from prior-year levels. At $704 million, in fact, this top-line result marks a whopping 25% sequential increase over a second quarter that saw competitor AK Steel (NYSE: AKS  ) declaring that it was "firmly on the road to recovery." Schnitzer's $40 million profit for the quarter is greater than twice that of the second fiscal quarter. If Schnitzer's result proves indicative of the steelmakers' second quarter collectively, then some investors are bound to conclude that a steadfast continuation of improvement in industrial activity takes fears of a double-dip recession off the table.

I would like nothing more than to agree, but as a doggedly truth-seeking Fool, I continue to call the shots as I see them. Incredibly, now 17 months after the $787 billion stimulus package took shape, Schnitzer Steel indicates that