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Nothing new here for regular readers but I thought the two histograms at the bottom of this graphic nicely contextualize earnings surprises within the broader macro picture. Earnings are down dramatically: with this kind of volatility it's difficult to argue for P/Es in the mid-teens on the S&P500, especially when the E is based primarily on cost-cutting.
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This is the 1930's. Traders need to be patient and trade technicals. This market will rally into end of August and then correct...maybe even crash. We have no sound economy. We don't manufacture. We'll run out of people to service eventually. If 40% of GDP was paper trading or turnover, you can see why the officials will be reluctant to stop HFT. The lows are not in yet. In fact, the worst is yet to come.
At 3:30 when they ramp the mkt I will have to change my poopy diaper again. The mkt doesn't trade on fundamentals, but now everyone knows that.
At 3:30 when they ramp the mkt I will have to change my poopy diaper again. The mkt doesn't trade on fundamentals, but now everyone knows that.
At 3:30 when they ramp the mkt I will have to change my poopy diaper again. The mkt doesn't trade on fundamentals, but now everyone knows that.
For reference, we peaked on a TTM basis at $84, so earnings are down about 65% in 2 years, and the depression has only begun. Wait 12 months and people will no longer be able to pretend that recent lifestyles were anything but an illusion.
Forget Barrons, and get the data yourself. S&P posts a great Excel sheet with all you need to know about earnings:
www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLS
Q2 net earnings are coming in at about 7.27. Q1 was 7.52. Q3 estimate is 7.45. That's about $30 per year, so the PE that way is about 32.
On a trailing 12 month basis, earnings are probably going to be slightly negative for the first time in history as of Q3. The forward estimate for 2010 is just $37, so even there the PE is 26. The PE is high no matter how you crunch it, so long as you are using real earnings, not operating (BS) earnings, like the propaganda outfits want you to. What counts is the bottom line, and secular bear markets bottom at under 10X bottom line earnings.
I'm very short right now, and if we rise further I'll short more. I think this is April 1930 redux. The real numbers leave no doubt: this is a depression.
can anyone comment on the p/e's shown on this site?
http://online.barrons.com/public/page/9_0210-indexespeyields.html
Last Week Prev. Week Year Ago
S & P 500 Index 979.26 940.38 1257.76
P/E Ratio 142.75 137.08 20.83
the 16 p/e is for the past year while the triple
digit p/e is for the past quarter or maybe current
quarter....
i would weight the more recent data more heavily
than the more distant or even composite.
remember that since a year ago we have had a 2
trillion usd deficit, 3 quarters of shrinking
gdp, 40% decline in housing prices, u5 trillion
usd of unprocessed bad debt, 20% unemployment,
and 15-25% contraction in trade.....and sheila
bair asked for and received 500b usd of fdic
bailout money even though she and geithner "proved"
that the banking system was sound and solvent....
so if you think those are green shoots go ahead.....
and if you think that the market is forward looking
why did it crap all over itself last year? and
can anyone say derivatives?
Nothing I don't know. *sigh* This rally is going to take the DOW to 15,000 regardless. I give up. I don't dare go short, and I missed most of the rally, thinking back in May that it didn't have much more to go. I'll just sit in cash and hope and pray we'll see double-digit interest rates some time between now and when I hit retirement age in about twenty-five years.
Nice post. Very concise and informative.
What does reality have to do with blue pill fundamentals?
Thanks for the chart.
But I thought everyone's earnings exceeded estimates -- I thought everyone gets a blue ribbon!!
Earnings season = stat-juking season