Visualizing Hope

Tyler Durden's picture

The chart below present the change in reported and projected corporate Revenues and EPS (excluding financial companies), and highlights the dramatic improvement in the economy expected by analysts over the next 2-3 quarters. In the next quarter things for companies get dicey with both revenue and EPS expected to be flat with Q4 of 2008. Whether or not this is attainable will be seen shortly. Yet where it does get just a little amusing, is 2 and 3 quarters in the future, when EPS are projected to increase by 23% and 20% respectively, while everyone hopes sales can wave a magic wand, and with skeleton crews of employees and no growth capex investments, are assumed to grow by 11.2% and 9.5%. Additionally, analysts are now forced to actually really ramp up their expectations in order for stocks to grow incrementally from here. If readers believe that corporate revenues in Q1 of 2010 can grow sales by more than 10% from Q1 2009 (while continuing to fire people), then by all means, buy stocks.

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waterdog's picture

Well that is our show for today folks. Tune in Monday for another informative episode of Baking with Ben. Our guests will be Timothy- I do not monetize- Geithner, who will demonstrate how to cut and fold stiffly beaten egg whites into a cake batter using a salad fork, and, Sheila- no matter what happens- Bair will show how to frizzle in a toaster oven.

And remember, just because something is half baked does not mean you cannot swallow it.

(crumpetwithtea thought this was tasteless. She has not liked me since I blogged her I thought a leavening agent was a spy with gas. You would be surprised how much humor an old lady can pack into a garbage disposal.)

Danz Gambit's picture

Why Timmy stick with his 'No Plan B' formula?

Anonymous's picture

Don't forget yeast raised Rham with the emulsifier!

DaveyJones's picture

"Additionally, analysts are now forced to actually really ramp up their expectations"

never knew "analysts" were crime victims

thought they were perpetrators

learn a lot on this site

lizzy36's picture

With the right amount of hopium one can visualize anything.......

spy under 104 and spx under 1039 - and cramers head exploding on the 4 whatevers of the nasdq taking a collective dump.

Sec.NotSure's picture

Sometimes a dump can be so relieving cant it...I mean stocks....err uhhh yeah...

Anonymous's picture

Loved it Sec.notSure - hilarious !!

Stoploss's picture

Off topic, but heard something about govt lending directly to small business.

Anyone else?  Or maybe im losing whats left of my mind.

CIT could file this weekend.  No need to bail out if the fed is primary lender.

deadhead's picture

obama pushing banks to lend more (they won't).  look for the sba to start lending directly versus the current paradigm......  subprime business loans coming up.

Stink_Pickle's picture

I fear that you're correct, dh.  I am always dumbfounded when policy makers believe they can manipulate and outsmart markets.

AR's picture

The gyrations of "visualizing hope" versus reality (this is funny, as I suspect most of us at one time or another in our careers have in their own way, experienced it). We all have been wrong. In fact, probably we all have almost blown ourselves up a few times over the years. A bad trade, investment or macro thesis -- usually develops like this, whereby, it always seems to "mask itself" inside the definition of HOPE.  Here's what we've learned. A bad trade usually starts off like this: (1) Oh, it's OK. (2) This is not good. (3) This is bad. (4) This is really bad. (5) This is DISASTEROUS. (6) I think we're almost out of business.  Moral: Learn from other's when they tell you to use stops, to be disciplined, and to liquidate a bad trade or thesis no later than step #3 above. HOPE doesn't really have a place in successful investing. Lastly, the majority of analysts on Wall Street are sheep, not cutting edge, forward thinking minds protecting us from "visualizing hope." Funny... I can still remember those trades after 30 years (taste them too). Good luck everyone. Have a good weekend. Special thanks to Tyler and ZH staff also.

deadhead's picture

great words of wisdom AR.  thank you.

DaveyJones's picture

"HOPE doesn't really have a place in successful investing"

or regulating, prosecuting or governing

spekulatn's picture

I can still remember those trades after 30 years (taste them too).

 

OUTFRIGGINSTANDING stuff AR.

 

"MARK IT ZERO, DUDE"

 

hp12c's picture

Companies will try to squeeze the sponge to wring more EPS on flat or declining revenues for only a few quarters....then it's put up or shut up...

aldousd's picture

This is very enlightening! Nice idea!

ShankyS's picture

It is going to be fast and brutal. There will be one last pop, and at the top of wave 2 of P3 (using EWT terminology for simplicity's sake) will be the last exit for the longs and if they fail to take that opportunity......sorry. We have screamed loud enough and long enough. Maybe the web is a reliable source of information afterall. (IMO, the digital dickweeds day (months/years) in the sun.)

deadhead's picture

kenny and the crew at his site are great....i always read your stuff shanky.

 

 

max2205's picture

OMG, earnings = FASB ect. Do we still think Co's are not cooking the books. See IRS anncmt on greater Co audits to collect 350 B this year. Once they get done with payroll errors (ha), they will notice bigger errors.

Anonymous's picture

i'm visualizing world crap......

InExile's picture

Hope is for dopes.  VIX over moving averages, asset correlation up, munis on the edge.  Look out. Tired of DC Happy Talk.

 

Anonymous's picture

Sooo, how's that hopey changey thing treatin' ya?

Hephasteus's picture

Could someone projecte and extrapolate me a pony while they are at it.