If one steps back from the adjusted, non-GAAP EPS "beats" reported by companies this earnings season which benefit from what is set to be a record quarter of stock buybacks and an unprecedented drop in consensus expectations, Q1 earnings season for the "blue chips" so far has truly "blown", with revenue declines announced at IBM (12th in a row), McDonalds, Coke, and earlier today Procter & Gamble also reporting that its sales have fallen for fifth straight quarter. And then moments ago "diversified global tech" bellwether 3M reported that its sales declined 3.2% year-on-year to $7.6 billion. The company also missed its EPS, and adding insult to injury, "the company now expects earnings to be in the range of $7.80 to $8.10 per share versus $8.00 to $8.30 per share previously."
Today is shaping up to be a rerun of yesterday where another frenzied Asian session that has seen both the Shanghai Composite and the Nikkei close higher yet again (following the weakest Chinese HSBC mfg PMI in one year which in an upside down world means more easing and thus higher stocks) has for now led to lower US equity futures with the driver, at least in the early session, being a statement by the BOJ's Kuroda that there’s a "possibility" the Bank of Japan’s 2% inflation target will be delayed and may occur in April 2016.
Moments ago McDonalds reported its latest sales numbers which were basically atrocious, worse than usual, and missed across the board. At this point the operational challenges facing the company are clearly unfixable in its current iteration which is broken beyond merely a CEO switch, and not even a "buy 1 Big Mac, get 3 Big Macs (and Joseph A Banc suits) free" strategy will fix the ailing fastfood maker, whose secular collapse is best captured by the charts below. So what does the stock do? It jumps.
Whether it is in sympathy with the now relentless surge in the Shanghai Composite which tacked on another 2.44% overnight to close at a fresh multi-year high just shy of 4400, well more than double from a year ago, or because Mrs Watanabe was unable to read the latest Japan trade data whose first trade surplus in 3 years hinted that there will be no new easing by the BOJ any time soon, but overnight the Nikkei closed above 20,000 for the first time in 15 years, with "makers of chocolate, mayonnaise, potato chips and household appliances" helping lift the Tokyo market according to the WSJ. The now daily Asian euphoria however did not last long in the European session, and after opening higher, the Stoxx Europe 600 slipped into negative territory just an hour into trading, and was down 0.4% by midmorning, lead by a near 1% decline on Athens' mains stock index, which has since recouped losses stemming from the overnight report that the ECB is considering an up to 50% haircut on Greek bank collateral, a move that would wipe out the Greek financial sector with ease.
"At the bottom of the cycle, firms cut labor faster than output. The higher productivity led to improving margins, earnings and stock prices. Now labor is being added faster than output, and with large companies like McDonalds, Walmart and Target announcing pay increases, unit labor costs are likely to increase further. All told, there is a good chance earnings will actually shrink this year. We think the market is too high if earnings have, in fact, peaked for the cycle, and we have reduced our net exposure by adding more shorts."
- David Einhorn
“In a time of deceit telling the truth is a revolutionary act.” ? George Orwell
“You shall know the truth and the truth shall make you mad.” ? Aldous Huxley
Here is what happens when mega-corporations such as WalMart and McDonalds, whose specialty are commoditized products and services and have razor thin margins, yet which try to give an appearance of doing the right thing, raise minimum wages. They start flexing their muscles, and in the process trample all over the companies that comprise their own cost overhead: their suppliers and vendors.Take the case of WalMart: the world's biggest retailer "is increasing the pressure on suppliers to cut the cost of their products, in an effort to regain the mantle of low-price leader and turn around its sluggish U.S. sales."
McDonalds Stock Slides After Fast-Food Chain Reports 9th Consecutive Month Of Declining Global SalesSubmitted by Tyler Durden on 03/09/2015 08:30 -0400
While the debate rages just what is causing the persistent weakness in McDonalds same store sales now stretching into its second year, there is no debate that whatever the reason may be, the once-iconic fast food chain is hurting. Because after staging a modest year end comeback and almost rising back to flat in December when it almost broke even, dropping "only" 0.1%, since then global sales have once again slowed down markedly, and have dropped by 1.8% and 1.7% in January and February respectively.
State Department spokesperson Marie Harf explains to no lesser pillar of unbiased reporting than Chris Matthews that - as opposed to President Obama's 'bomb them into oblivion' perspective, "we can't kill our way out of this war [with ISIS]... we must address the root causes - like joblessness." Even Matthews is stunned at this perspective, exclaiming "we're never going to chieve that in 50 lifetimes, there'll always be poor muslims." But, as the administration appears to be suggesting, even every radical muslim deserves $10.25 an hour to work at Baghdad McDonalds...
The world has begun to devolve into two distinct factions. The imperialist actions of the American Empire in the Middle East and Ukraine have pushed Russia, China, India, Brazil, and Iran closer together regarding trade deals; transacting commerce without using the USD; oil and gas pipelines; and military cooperation. Totalitarian regimes are known for using foreign threats to distract the populace from domestic suffering. As a matter of fact, all regimes use this tactic. When the global economy rips apart at the seams due to the debt saturation, world leaders will attempt to blame other countries for their dire circumstances. Foreign enemies are good for business. Ask our Nobel Peace Prize winning President. War is inevitable.
Presented with little comment aside to note that a robot burger-flipper would never react like this were he (or she) to be fired from their job at McDonalds...
McDonalds CEO Retires Following Horrible Year: New Boss Seen Here Wearing At Least 37 Pieces Of FlairSubmitted by Tyler Durden on 01/28/2015 18:52 -0400
The Board of Directors of McDonald's Corporation today announced that Don Thompson will retire as President and Chief Executive Officer and as a member of the Board of Directors after nearly 25 years of service to the company, effective March 1. The Board has elected Steve Easterbrook to replace Thompson as President and CEO. Easterbrook was also elected to the Board of Directors, filling the vacancy created by Thompson.
After a customer went berserk 2 days ago over 40 cents, it appears the McDonalds Riots are contagious...
Half a century ago, Clint Eastwood killed a whole lot of people for "a fistful of dollars." This Christmas, a particularly agitated customer nearly killed the staff at a McDonalds over the matter of a fistful of cents, or some $0.40 to be precise. The best part: it was all caught on tape.
Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."
"I’m tired of being outraged!"