The Three Funniest Charts You'll See This Earnings Season

Tyler Durden's picture

S&P 500 EPS is forecast by consensus to decline 2% both sequentially and YoY in 3Q12 driven by net margin compression. As Morgan Stanley's Adam Parker notes, it appears (for now) that we can have an earnings recession without an economic recession; but the disconnect may be a lag as opposed to a decouple. Roughly 50% of companies are expected to experience YoY contraction in net margins but - and this is the 'funny' segment of this post - consensus expects an 18.2% incremental margin expansion in 2013 (from a 7.2% rise in 2012 which is down from 13.1% rise in 2011); and while 3Q EPS is expected to be negative, the following three quarters EPS growth are expected to rise dramatically (double that of 2012 on average). It seems investors (and analysts) are still willing to believe in miracles.

This is one of Morgan Stanley's chief concerns. Currently, the consensus embeds very optimistic 2013 incremental margin expectations, accelerating at a time when a potential fiscal cliff is imminent and profit margins are already at record levels.


We doubt that companies can drop through 18 cents for every dollar they grow revenue in 2013.



Remember, earnings are declining for the entire S&P500 right now!


but are expected rise dramatically in the quarters to come - again by some miracle - even after 3Q2012 EPS has been reduced notably already - with 4Q12 EPS dropping to wher 3Q12 was 7 months ago...


Priced In? Only if you think Fed-driven multiple-expansion is the 'alter-ego' of reality...


Charts: Morgan Stanley

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lolmao500's picture

Even funnier this earning season : the FED is making a profit for the treasury!

In other news, the American Talibans are on the march :

Charlie Fuqua, Arkansas Legislative Candidate, Endorses Death Penalty For Rebellious Children In Book


NotApplicable's picture

Obviously, they're very bullish on unicorn farts.

idea_hamster's picture



Only if you think Fed-driven multiple-expansion is the 'alter-ego' of reality.

Hmm...TD says that like there is some sort of alternative.

knukles's picture

See, this shit is exactly what's wrong with the whole world.

Sound thinking.
Yeah, that's it.
Sound thinking.
Restorations to sanity.
Holy Crap!

Same thinking is the Expectation that bad earnings gonna lead to bad stock performance.
The market has been taken over by Skynet, is probably under the voodoo manipulations of gubamental and Wall Street zombies, is no place for women and children, makes no logical sense anymore, why even the FAF journals are irrelevant proofs of nonsequitors of yesteryear.  ....
Earnings have no place anymore.
Think of P/E expansion.
Rates cannot go a hell of a lot lower (only because they're so bloody low right now, yes durations are big and the value of an .01 humongous, nonetheless) and earnings ain't going up... perpetually forecast to go up then revised down, every year for...

Fuck earnings....
They're become meaningless...

My God, what am I saying!!!!!!!!!!!!!!!

rocker's picture

It's amazing Knukles. Now they have a reason to pimp oil back over $110.00 a barrel again.

I can see QE4, or is it QE5. I've lost count. Either way. Bullish for oil again. Go Banking Cartel.

Lost Wages's picture

Oh, Fuqua... and Conservatives wonder why everyone isn't jumping on the bandwagon.

aint no fortunate son's picture

we're off to see the wizard, the wonderful wizard of oz

Dr. Engali's picture

Keep lowering that bar so we can all cheer when CNBS declares that XYZ company beat concensus........clearly bullish! BTFD!

Stoploss's picture

Waiting to see who's the first to take a hatchet to 4q eps so they can "show the growth" LOL!!

Im shocked, SHOCKED, i say, that no one has done this yet.

Everybodys All American's picture

it's all priced in ... unless it's not.

debtor of last resort's picture

Now i know what MSM means. Morgan Stanley Mongering.

youngman's picture

It does not matter what the earnings are...its what the HFT algos can do the stock price.....that is the future...liquidity baby..someone says "oh crap"...and fertilizer stocks to the moon...algos and soundbites...that is the new market..invest like you are a software programer...

Nobody For President's picture

Priced In? Only if you think Fed-driven multiple-expansion is the 'alter-ego' of reality...


I think you mean 'alter-algo'...

Super Marco's picture

Did Lewis Carroll think up these charts?

Rainman's picture

Those cyclical recessionists just never give up....but somebody has to be optimistic to keep the thousands of comissioned sell-side pimps from looking for McJobs. Forward !

tahoebumsmith's picture

So now that the QE to Infinity binder has worn off, they are now turning to the crystal ball? We a Fucking Doomed... Literally

CPL's picture

So funny your wallet will split.

Bernankenstein's picture

So, when I hear people say the economy is on the skids, I say: Correct. At the Bureau of Engraving and Printing, (my favorite place for a day trip, by the way) there are endless skids of freshly printed and stacked currency. And I love it! So, yes, I admit it, our ecconomy is on the skids. Bwah, ha, ha!!!!!  

LikeClockwork's picture

Pres Romney will fix everything and you will get your free-markety bounce in '13.