After yesterday's latest drop in stocks driven by "old economy" companies such as CAT, which sent the Dow Jones back to red for the year and the S&P fractionally unchanged, today has been a glaring example of the "new" vs "old" economy contrast, with futures propped up thanks to strong tech company earnings after the close, chief among which Amazon, which gained $40 billion in after hours trading and has now surpassed Walmart as the largest US retailer. As a result Brent crude is little changed near 2-wk low after disappointing Chinese manufacturing data fueled demand concerns, adding to bearish sentiment in an oversupplied mkt. WTI up ~26c, trimming losses after yday falling to lowest since March 31 to close in bear mkt. Both Brent and WTI are set for 4th consecutive week of declines; this is the longest losing streak for Brent since Jan., for WTI since March.
We always keep a weather eye on the state of retail investing in the U.S. There is, of course, the old saw that this batch of buyers doesn’t get involved until the top; therefore, it makes sense to see if they are getting too “Bulled up”. Then there is the fact that retail “Cult” stocks can hold premium valuations far longer than those without such sponsorship.
The Oldest Trick In The Accounting Book Is Back: How Coke Just "Beat" EPS Despite Sliding Revenues And ProfitSubmitted by Tyler Durden on 07/22/2015 08:13 -0400
If KO had applied the proper tax rate of 28.7% to its non-GAAP pre tax income of $3.6 billion, the EPS number it would get is not $0.63, but $0.58. Why is this key? Because Wall Street's consensus estimate for KO EPS was $0.60, or right in the middle. And that, ladies and gentlemen, is how both Intel and now Coca Kola used the oldest trick in the accounting book to "beat" EPS: by using an unrealistically low tax rate.
Apple Plunges Despite EPS Beat On iPhone Sales Miss, Drop In China Sales, Weak Guidance And Strong Dollar WarningSubmitted by Tyler Durden on 07/21/2015 16:48 -0400
The company which was carrying the fate of not only the Dow Jones and the S&P 500 on its shoulders had taken the stairs up, and just took the elevator down.
Unleash the talking head spin...
The reason IBM stock is currently sliding and dragging down the broader Dow Jones future with it is that with Q2 revenues of $20.8 billion, the company not only missed expectations, but was a plunge of 13.4% from a year ago: a drop that surpasses the biggest revenue drop recorded during the peak of the financial crisis! This is also 13 consecutive quarter of declining Y/Y revenues.
For all those wondering just how INTC did it, here's the reason for Intel's beat in one simple chart.
Just when everyone thought it was fixed, crude inventories start building again as API reports (for the 2nd week):
*API SAID TO REPORT CRUDE SUPPLIES ROSE 1.8M BBL LAST WEEK
This follows a surprising 1.3 million barrel build last week reporrted by API. WTI slipped back to $61.00 after hours...
The Fed stimulates absolutely nothing but the media’s descriptions of it and the various economists and their models that depend solely on them being successful in doing so. If recessions are emotional and irrational pessimism as the monetary textbooks believe, then QE and ZIRP are just right sort of “happy pills” to push emotions back to the “right” direction. Is it any wonder the economy is in danger of sinking toward catastrophic failure?
Einhorn just found his next target: U.S. onshore E&Ps or the oil fracking companies.
Following yesterday's early MNI rumor that a Chinese QE is being "considered" and which sent the Shanghai Composite surging 3% and led to an initial boost in US stock futures, overnight the PBOC scrambled to once again deny such speculation. Of course, going full "cold Turkey" on Chinese stimulus would be too much for the market to handle, so in a piece by the WSJ also released overnight, the author said the PBOC would pivot from outright QE to mere LTRO, which is also not new and was reported over a week ago here in "China Floats QE Trial Balloon, PBoC May Launch LTROs." In any event, for now at least, Asian stocks are not happy despite Apple's latest blockbuster results, and neither is Europe, with the Stoxx 600 down 1%, and even the E-mini is hugging 2100 unable to levitate on any imminent central bank intervention.
IBM numbers in a nutshell: Revenue dropped by 11.9% to $19.6 billion; Net Income dropped by 2.4% to $2.3 billion...
And yet... GAAP EPS rose by 2.6% to $2.36!
Here's the accounting magic behind this "beat"