Capital Expenditures

Empire Fed Tumbles Back Into Contraction As Hope Slumps To 6-Month Lows

After 2 brief dead-cat-bounce months of hope, The Empire Fed business survey has tumbled back into contraction (-4.21 missing expectations of +2.0). The index is now at 3 month lows despite rises in the number of employees, average workweek, shipments, and new orders but 'hope' tumbles to its lowest since Feb 2016.

Someone's Lying

Initial jobless claims dropped 1k to 266k (from a downwardly revised 267k) remaining near 43-year lows. Here's why that's odd...

The Stock Market's Big Lie: "I'll Take The Under"

One of the biggest “lies” in the financial world is that if you just invest your money in the markets over the long-term, you will average 7, 8 or 10% a year. Asset-gatherers don't give enough credence to the long-term effects of the “when” you start your investing cycle. The primary problem is that investors DO NOT have 100-years to invest BEFORE their disbursement cycle begins. Unfortunately, with stock valuations pushing the second highest level in history, forward return expectations (before inflation, taxes, and expenses) are extremely low.

Tesla Misses, Burns Nearly Half A Billion, Warns It Has Hit Bank "Funding Limit": Stock Rises

Following several repeat, and loud, warnings that sales are slowing down, moments ago Elon Musk did not disappoint and reported results that missed substantially on both the top and the bottom line, with non-GAAP EPS of (1.02) nearly twice as bad as what consensus expected, while reporting nearly half a billion in organic cash burn, while warning that "we have reached our funding limit with a banking partner"

Oil Industry About To Be Burned Again By Fall In Oil Prices

The current oil-price rally led many to believe that a full price recovery was underway. But inventories have been too large for that to happen short of epic supply interruptions. U.S. rig counts have surged as oil prices sink. Capital is driving the oil markets and it enables bad behavior by producers. That is why oil prices will stay low. The oil-price rally that began in February is over.

IBM "Beats" Despite 17th Straight Revenue Decline; Margin Miss; Spike In Net Debt

After 16 consecutive quarters, or 4 years, of declining annual revenue growth, there were some whispers that this could be the quarter IBM finally breaks the trend. Alas, it was not meant to be, and moments ago IBM reported Q2 revenues of $20.24BN, which will beating consensus of $20.03BN, was still 2.8% lower than a year ago. But more troubling is that despite the relatively modest drop in revenue, GAAP profit tumbled 27% to $2.61BN, with Net Income plunging 29% to $2.5BN.

Empire Fed Unexpectedly Drops As New Orders Tumble, Labor Conditions Deteriorate

While recent regional Fed manufacturing indices had shown a pickup in recent weeks, moments ago the Empire Fed, aka the New York State manfucaturing index, disappointed, declining five points from 6 to 0.55, below the 5.0 expected print. The volatile series has now printed below zero, at zero, above zero, below zero, above zero and at zero over the past 6 months.

Just 3 Things

Based on the fact that the P/S ratio has been steadily rising and has eclipsed prior peaks, we are left to select from one of two conclusions: that investors are extremely optimistic about the potential for revenue growth; or investors are once again caught in the grasp of bubble mentality and willing to pay huge premiums to avoid missing out on further gains. However, the means of magically boosting these asset prices are 'finite' in nature and eventually the "devil will be paid his due."

Bad Earnings, Balance Sheet Rot, & The "Brelief" Rally

Despite mainstream economists hopes that somehow “this time will be different,” the ongoing massaging of economic data through seasonal adjustments to obtain better headlines did not translate into actual prosperity.  Of course, “reality” is a cruel mistress and despite ongoing hopes and overstatements, “fantasy” eventually gives way.

Empire Fed Rises Above Highest Estimte On Jump In New Order As Employment Conditions Deteriorate

In a rare glimpse of sunlight for the recessionary US manufacturing sector, moments ago the Empire Fed Manufacturing Survey reported that contrary to expectations of another contractionary print (consensus was looking for -4.9%), General Conditions in June 2016 expanded modestly for New York manufacturers with the headline general business conditions index climbing a whopping fifteen points to 6.0, above the highest estimate of 2.0. Unfortunately for workers, the headline did not translate into better work conditions as the number of employees index declined to 0.0, the worst print since March.