"On The Cusp Of A Staggering Default Wave": Energy Intelligence Issues Apocalyptic Warning For The Energy SectorSubmitted by Tyler Durden on 11/27/2015 21:24 -0500
The US E&P sector could be on the cusp of massive defaults and bankruptcies so staggering they pose a serious threat to the US economy. Without higher oil and gas prices — which few experts foresee in the near future — an over-leveraged, under-hedged US E&P industry faces a truly grim 2016. "I could see a wave of defaults and bankruptcies on the scale of the telecoms, which triggered the 2001 recession."
Tiffany Tumbles After Missing EPS, Slashing Guidance; Blames Strong Dollar, "Volatile, Uncertain Conditions"Submitted by Tyler Durden on 11/24/2015 07:25 -0500
Once upon a time, luxury jewelry retailer Tiffany was seen as the bellwether for the global market, however not so much in the New Paranormal when as a result of the company over-reliance on China, and a new focus on aspirational middle-class consumers, the stock had recently been trading at levels not seen in over two years. Things went from bad to worse this morning when the company reported its latest disappointing earning, in which it also slashed full year guidance, blaming a strong dollar, lower tourist spending, as well as "volatile, uncertain economic and market conditions in the U.S. and other regions."
"If you just exclude all the bad stuff, earnings look quite good."
If The Economy Is Fine, Why Are So Many Hedge Funds, Energy Companies And Large Retailers Imploding?Submitted by Tyler Durden on 11/19/2015 09:12 -0500
If the U.S. economy really is in “great shape”, then why do all of the numbers keep telling us that we are in a recession? In 2008, stocks didn’t crash until well after the U.S. economy as a whole started crashing, and the same thing is apparently happening this time around as well.
This is the REAL picture of the global economy. It isn’t what CNBC and the talking heads tell you. It is economic collapse.
While there are many that continue to dismiss individual "economic data points" in order to promote a "bullish bias" for the equity markets, it is more important to accumulate the "weight of evidence." The rising inventory levels, weak consumption, and plunging imports all suggest that the domestic consumer is much weaker than currently believed. The last time this combination of data points collided was just prior to the start of the last recession. But then again, this is where "economic theory" collides with "Main Street realities." Place your bets carefully.
Now it’s getting serious.
While there are certainly reasons to be "hopeful" that stocks will continue to rise into the future, "hope" has rarely been a fruitful investment strategy longer term. Therefore, let's analyze each of the optimist's arguments from both perspectives to eliminate "confirmation bias."
WalMart Carnage: Stock Plummets Most In 17 Years After Slashing Earnings Guidance, Blames Wage HikesSubmitted by Tyler Durden on 10/14/2015 14:50 -0500
Do you see what happens Larry when Wal-mart succumbs to "progressive" pressure and hikes minimum wage? This: WMT CFO: 2017 RISE IN WAGES TO COST $1.5B; WMT PLANS REDUCTION IN CAPITAL EXPENDITURES THROUGH FY19; WAL-MART SEES FY2017 EPS DECREASING 6-12% VS FY2016. In other words, the company just slashed its 2017 earnings forecast by up to a whopping 12%: the reason - the recent increase in wages. So did the American worker win for once? Alas, no...
There has been no such upside to QE in any of the channels and pathways that economists were absolutely sure would result. Instead, without any gains, there has only been engineered a massive economic hole that is “unexpectedly” widening and deepening again. Apparently the “slippery slope” of economic denial is likewise as universal as the aligned direction of economic progression across the world. All economist-created roads lead to "more global stimulus," and fittingly, we are almost all Japanese now...
Without government intervention the “invisible hand” of the world oil market will simply bankrupt US shale companies and with it destroys the US shale oil industry.
Over the past few years no institution has had more consequences beholden to their words than the Federal Reserve. So much so one could reasonably argue in response to prevailing circumstances their communiques overshadowed most others; including presidents and other leaders. The problem today is; in their effort to bring more clarity via press-ers, and more as to what might be transpiring behind the doors at the Eccles building, they’ve now communicated more confusion in the last two weeks nullifying all previous efforts. In our eyes it seems to be working exactly the same as its other policy outcomes: adding confusion, uncertainty, and having the exact opposite of intended results.
The aggregate Buybacks to Free Cash Flow ratio for the S&P 500 exceeded 100% for the first time since October 2009. The ratio hit 108% on a TTM basis at the end of Q2, which represented a 12.9% increase quarter-over-quarter and a 42% increase year-over-year. The 10-year median ratio was 72.2%. And that, in a nutshell, is why the market is tumbling today - the biggest buyers of stock in the past 2 years, the corporations themselves, just priced themselves out of the market and no longer generate the cash needed to push their own stock to new all time highs.
The Saudis must alter course, seek a consensus on prices and volumes with their fellow OPEC members, coordinate with Russia, and reduce output from 2015’s average (approx. 10.5 mmbbl/d) to signal their commitment. Why? Crude prices staying lower for longer will rapidly devastate the Saudi economy.
Despite some strangely optimistic expectation of a -0.5 print, September Empire Manufacturing printed -14.67, showing absolutely no hockeynesian dead-cat bounce mean-reversion. Hovering at the worst levels since April 2009, the underlying data is a total disaster. New Orders remain firmly negative and inventories collapse (who could have seen that coming?), and even more concerningly, employment and average workweek plunged into negative territory for the first time in over a year. Simply put, this report suggests total carnage in the manufacturing sector and, just as we have pointed out (most recently here and here), the exuberant inventory over-accumulation of the past few years - from Fed-deluded malinvestment - is about to come crashing down.