As we previewed yesterday, perhaps more so that the longs it was the company's near record shorts who were expecting today's earnings release to see if their bearish bets on the company will pan out. And while the stock slid all day, losing 4% in regular hours after Jim Chanos announced he was short the car maket, the stock now appears to be jumping in the after hours session having just reported its Q1 results which were as follows.
There is one group of investors who will be closely watching Tesla's results due out tomorrow: the shorts. The reason is that with the stock trading near record highs following a dramatic rebound from the February lows when it plunged to $150, only to rebound back to $250, short sellers have stubbornly refused to step away, and as the chart below shows, short interest remains just shy of record high.
Students of Austrian business cycle theory are familiar with the term malinvestment. A malinvestment is any poor use of resources or capital, commonly made in response to bad policy (usually artificially low interest rates and/or unsustainable increases in the monetary supply). Here, we introduce a related term: malincentive. While not part of the official economic lexicon, I consider a 'malincentive' a useful word to describe any promise of short-term gain whose long-term costs outweigh any immediate benefits enjoyed. Malincetives and malinvestment go hand-in-hand. In my opinion, the former causes the latter. As humans, we respond remarkably well to incentives. And dumb incentives encourage us to make dumb investments.
If yesterday it was doom and gloom for tech stocks, then today it's Facebook's turn for soom upside down frown turning boom. Moments ago the social network reported another round of blowout results...
Despite all eyes on the slighlty better than expected MAUs (310m vs 308m exp.), Twitter is being clubbed like a baby seal after-hours as it has slashed Q2 revenue:
TWITTER SEES 2Q REV. $590M TO $610M, EST. $677.1M
Most crucially, Twitter explains, "Revenue came in at the low end of our guidance range because brand marketers did not increase spend as quickly as expected in the first quarter." Which also does not exactly bode well for the overall ad spend market.
The entire Nasdaq future is getting monkeyhammered after hours following a strike and a miss by today's two key tech companies reporting after hours, when both Microsoft and Google reported and missed on both top and bottom line.
"If somebody needs a bell ringing to figure out that the [market] frothy right now, then I’m in the business of selling hearing aids..."
The economy’s capital structure remains imbalanced as a result of the enormous amount of monetary pumping since 2008 (total TMS-2 growth since then: approx. 128%). There is a limit to this though, even if it cannot be quantified. What can be stated though is that the greater the boom, the greater the eventual bust usually is. There are now more and more indications that a decisive inflection point may be quite near.
In 1977, the total indebtedness of U.S. government, corporate and household borrowers was $323 billion. By 1985, that figure had grown to $7 trillion. Volcker left the Fed in August of 1987 after handing the reins over to Alan Greenspan. By year’s end 2015, U.S. indebtedness had swelled to $45.2 trillion. Tack on financials, which few do, and it’s $64.5 trillion and unabashedly growing. We are a nation transformed. What has today’s vast store of debt purchased? Certainly not freedom.
Someday this is going to end in tears. But not tomorrow. Kuroda knows this, hoping that the “after tomorrow” won’t be under his watch. After me the deluge!
Following its demise into contraction in February, Chicago PMI jumped back to 53.6 (expansion) in March which is better than expected but remains below January's 55.5 highs. The last 12 months have seen quite unprecedented noise in this economic barometer and MNI reports respondents saying the recovery is "slow and steady... fuelled by warmer weather."
Headlines will crow of the seasonally-adjusted 'beat' of expectations for the Dallas Fed survey (-13.6 vs -25.8 exp) but this is the 15th month in contraction (below 0) - something only seen in recession. Scratching below the surface we see employees, workweek, and capex all in contraction and forward expectations for new orders and employment tumbled. Perhaps that reality is what drove one respondent to rage, "anyone who says the economy is not in recession is peddling fiction."
1/3 of all traded companies are spending MORE on buybacks than they generated in free cash flow...
TIF just lowered EPS guidance for Q1, and now sees EPS down 15-20%, nearly three times worse than the consensus estimate of -7%. The company also issued Q2 guidance of down 5-10%, and expects growth to resume in the second half. Finally, TIF issues downside guidance for FY17, sees EPS unchangd to down mid single digits from $3.83 vs. $3.88 Capital IQ Consensus; it also sees FY17 revs equal to last year's $4.10 bln) vs. $4.15 bln Capital IQ Consensus. Basically more deteriorating earnings all around, offset by the company removing the number of outstanding shares.
For the thousands of new entrants into the oilfield services (OFS) industry in the past 15 years - both workers and companies – if you didn’t know what senior secured lending covenants were a year ago, you sure do now. Many new borrowers are enduring a painful education on the legal implications of the lending documents they signed. There is said to be lots of capital on the sidelines looking for deals. OFS owners and managers up against a debt wall should consider finding some.