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2012 - 2013 Corporate Margin Bridge In One Word: "Magic"

Tyler Durden's picture


At the end of January we first discussed the rolling over of corporate margins and sure enough the consensus for 2012 margin compression has turned our way with only 42% of the S&P 1500 now expected to increase net margins YoY. What is simply 'incredible', in the words of Morgan Stanley, is the jump from 2012 to 2013 expectations of net margins as this chart so well indicates. In 2013, 89% of firms are expected to miraculously rediscover their pricing power and increase net margins. Our word for this is 'magic'.


Perhaps we need an Olympic Ice Hockey commentator to take over the programming on CNBC? Do you believe in miracles?


Chart: Morgan Stanley


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Mon, 04/09/2012 - 14:44 | 2328878 barliman
barliman's picture



My word for this is horseshit.


Mon, 04/09/2012 - 14:46 | 2328887 Future Tense
Future Tense's picture

60 Minutes ran a segment last night discussing the "only" thing that may impair this amazing US recovery: the European debt crisis. Based on the graph above, it looks like gravity/reality may impair the recovery as well. 60 minutes clip link below is definitely worth the watch:

Mon, 04/09/2012 - 15:02 | 2328952 SilverTree
SilverTree's picture

More fucking QE.

Mon, 04/09/2012 - 15:18 | 2329010 CPL
CPL's picture

This next round will have to amount in the tens of trillions. The next after that 100's of trillions.


Mon, 04/09/2012 - 15:17 | 2329011 lemonobrien
lemonobrien's picture

they ain't gonna QE, they gonna bring on financial repression; aka, capital controls.

Mon, 04/09/2012 - 16:05 | 2329168 catacl1sm
catacl1sm's picture

They'd need a war or something for that. Oh wait, nevermind. Presidential decree is good enough too. And fuck Congress. They 'do nothing' anyway.

Mon, 04/09/2012 - 16:20 | 2329228 Koffieshop
Koffieshop's picture

Capital controls will increase the need for more QE.
If the price of goods have upper limits you are going to see empty store shelves.
This means that taxable (non-black market) economic activity will crater.
This means the budget hole will become even bigger.
This means Helicopter Ben will have to buy more TBills.

You can have price controls on specific products but not on everything. This is unless you live in a country where the state controls manufacturing and distribution (China, USSR). The only way for price controls to work is to have an authoritarian regime in a country that PRODUCES ITS OWN SHIT.

Mon, 04/09/2012 - 17:29 | 2329403 lemonobrien
lemonobrien's picture

capital controls as in controlling your capital into treasuries.

Mon, 04/09/2012 - 14:54 | 2328922 Dr. Engali
Dr. Engali's picture

My word is BATTshit.

Mon, 04/09/2012 - 14:58 | 2328931 barliman
barliman's picture


Not wanting to be argumentative ...

... but you misspelled the word. It should be ...



Mon, 04/09/2012 - 15:07 | 2328973 Dr. Engali
Dr. Engali's picture

Fat finger :)

Mon, 04/09/2012 - 15:51 | 2329129 Ivanovich
Ivanovich's picture

Would have been more convincing had you typed "Fatt finger".

Mon, 04/09/2012 - 15:02 | 2328943 ShankyS
ShankyS's picture

Horse hockeystick! Notice how the move to 89% will complete the form of a perfect hockeystick - ironic? 


TD - you need a cut and paste hockestick overlay now. It would make it so easy for the sheeple to understand.  

Mon, 04/09/2012 - 15:27 | 2329020 mayhem_korner
mayhem_korner's picture




Mon, 04/09/2012 - 15:33 | 2329066 Pairadimes
Pairadimes's picture

My word for this is 'inflation'.

Mon, 04/09/2012 - 15:40 | 2329090 CrashisOptimistic
CrashisOptimistic's picture

You guys are flailing and being indirect and talking your book.

My word for this is dismissal.  You only get margin spikes like this by firing people.

Mon, 04/09/2012 - 14:47 | 2328896 Stoploss
Stoploss's picture


Mon, 04/09/2012 - 14:59 | 2328938 UP Forester
UP Forester's picture

I vote for Don Cherry.

Between him and Bidermann, CNBS would be the fashion draw....

Because everyone knows the comedy station bit can't last.

Mon, 04/09/2012 - 17:12 | 2329361 tamboo
tamboo's picture

i vote for the other don cherry, he has way better chops.


Don Cherry & Herbie Hancock - Bemsha Swing (Live)
Mon, 04/09/2012 - 14:49 | 2328901 junkyardjack
junkyardjack's picture

In one word I'd call it: BTFD.  Its widely understood in all languages

Mon, 04/09/2012 - 14:49 | 2328904 PalladiumJockey
PalladiumJockey's picture

They can just make numbers up.

Mon, 04/09/2012 - 14:59 | 2328942 francis_sawyer
francis_sawyer's picture

This is the only chart that Birinyi reads when he uses his crayon & ruler (except on his chart the dotted lines part is solid)...

Mon, 04/09/2012 - 15:07 | 2328972 mayhem_korner
mayhem_korner's picture inadvertently left the word "can" in your post.  :D

Mon, 04/09/2012 - 14:55 | 2328907 SheepDog-One
SheepDog-One's picture

My word for all this is 'bullshit'.

Mon, 04/09/2012 - 14:55 | 2328915 Belarusian Bull
Belarusian Bull's picture

Inside the loony bin, everything is possible.

Mon, 04/09/2012 - 14:54 | 2328918 Dr. Engali
Dr. Engali's picture

The only margin expansion that will be happening in 2013 is that of the military industrial complex as we expand our wars into Iran.

Mon, 04/09/2012 - 15:03 | 2328957 UP Forester
UP Forester's picture

If they've predicted even $1 higher margin in 2013, I'm surprised more didn't.

After all, when a dollar is only worth 25 cents a year after the prediction, and everything costs 4x more, with 2% wage increase, everybody will buy more shit.  After all, they can afford it.

Mon, 04/09/2012 - 14:55 | 2328920 SheepDog-One
SheepDog-One's picture

Must....regain.....magical DOW 13, close....must....pump.......harder...

Mon, 04/09/2012 - 15:05 | 2328967 mayhem_korner
mayhem_korner's picture



Quietly, Au has outgained the Dow by 1.5% today, so far (Dow down ~ 0.7%, Au up ~0.8%).  These days happen from time to time with little fanfare...and yet they go a long way to explaining the year-end deltas.

Mon, 04/09/2012 - 15:11 | 2328986 CPL
CPL's picture

Dont sweat it. Look at volume. Anemic. Awful. In a couple more months, zero.


What does a pension plan do if no one is catching that "great" stock action.  They collapse same second people understand equities aren't cash or remotely even close to a replacement.  That implodes horribly.  Bond market goes into full scale pound sell button mode.


Bottoms out at S&P 97...then government paychecks start bouncing.  All of them.  Including all those IOU's called dollars.  Chain reactions now though, could be anything right now.  Iran, Bee's, Diesel, butterfly farts in asia and an earth quake happens in Detriot.  Anything. 



Mon, 04/09/2012 - 15:14 | 2328998 mayhem_korner
mayhem_korner's picture

Look at volume. Anemic. Awful. In a couple more months, zero.


Not zero...but just enough for the algo-masters to conform the market movements precisely to the narrative.

Mon, 04/09/2012 - 15:51 | 2329124 CPL
CPL's picture

Two things that need to happen there. Print job of trillions of dollars...easily done...interest rate hike...won't happen in a million years.

Mon, 04/09/2012 - 15:46 | 2329100 CrashisOptimistic
CrashisOptimistic's picture

No. No. and No.

You are analyzing.  That's not what 2011 taught you.  You were taught that governments will do anything to keep the wheels turning.  There will be NO bond market collapse.  If there is a seller, he will be murdered.  Literally.

Anything means Anything.  There is no way in hell that they will let their ponzi fall because some action is against an arbitrary law.  If they must break the law, they will break the law.  If a court tries to prosecute, they will defund the court.

Nothing within the control of governments, legal act or not legal act, will be allowed to take the system down.  Learn the lessons.  Greece gutted bond holders.  GM gutted bond holders.  Dominique Strauss Kahn was jailed until he resigned, and then released.

The law and your analysis based on it is not relevant.  Only things governments cannot control will take it down.  Like the physics of oil.

Mon, 04/09/2012 - 15:49 | 2329118 CPL
CPL's picture

Very true.  Gotta fix my script it appears.  #PeakDiesel and #PeakSweetLightCrude is the only real concern as is #PeakCoal.

Mon, 04/09/2012 - 14:59 | 2328923 Everybodys All ...
Everybodys All American's picture

No problem they just will keep widening the gap ... and I would not bet against the PPT in doing just that. There is absolutely no one trading this market so the manipulation can be accomplished quite easily.

Mon, 04/09/2012 - 15:02 | 2328954 Boilermaker
Boilermaker's picture

I love the absolutely obvious mechancial grind up also.  Just in a relentless linear fashion.  Or, better stated, as fucking blatantly artificial as possible.

Mon, 04/09/2012 - 14:55 | 2328925 mayhem_korner
mayhem_korner's picture



Isn't it also true that something like 93% of people think they are better-than-average drivers?

Mon, 04/09/2012 - 15:00 | 2328947 Boilermaker
Boilermaker's picture

60% of the time, it works every time.

Mon, 04/09/2012 - 15:24 | 2329027 css1971
css1971's picture

Vanity defines humanity. We are all the center of the universe.

Mon, 04/09/2012 - 15:23 | 2329030 JPM Hater001
JPM Hater001's picture

Yeah...that's my fault...I drag the number down...93% of all drivers are better than me.

Mon, 04/09/2012 - 14:58 | 2328936 buzzsaw99
buzzsaw99's picture

The margin you refer to is not the margin which matters. There is no market, there is only the bernank.

Mon, 04/09/2012 - 14:58 | 2328937 I Am Not a Copp...
I Am Not a Copper Top's picture

Kinda looks like Al Gore's Global Warming graph

Mon, 04/09/2012 - 15:02 | 2328944 mayhem_korner
mayhem_korner's picture



I was thinking more like Al's actual v. his expected "performance" on massage nite...

Mon, 04/09/2012 - 14:59 | 2328941 Boilermaker
Boilermaker's picture

Is thie were we all act like underlying factors, fundamentals, and normal valuation measurables matter?

Meanwhile, Ben is slamming fuckloads of money into the market to fully reverse today's opening loss?

I love this shit.  Can we talk PE ratios next?

Mon, 04/09/2012 - 15:25 | 2329038 JPM Hater001
JPM Hater001's picture

I check Websters and the MLS and I believe the correct metaphor would be "slamming massive fuckloads".

Mon, 04/09/2012 - 15:05 | 2328963 Yen Cross
Yen Cross's picture

 The ' Douche Bags " at Goldmans and their (XLF) brethren will lower guidance, and make everything OK!  Look at the melt-up happening as I post!

Mon, 04/09/2012 - 15:26 | 2329041 slewie the pi-rat
slewie the pi-rat's picture

welcome back from holy week, Y/C!

{holy week = birthdayParty, BiCheZ!}

i wuz "hoping" we hadn't lost you to a midlife crisis

tell us about her?

Mon, 04/09/2012 - 15:43 | 2329094 Yen Cross
Yen Cross's picture

 Thanks Slewie. I read your post's last night. Nice work , I must say!  I forgot how to " shrinkey-dink letters". A little help would be appreciated? It's written down somewhere. I suspect it's when Sacrilege did that update on ( green /red  arrow policy), last spring.

  Those { Bankrupt Europeans sure know how to party}! Been on Holiday since last Thursday!  ( DENIAL)...

 Midlife Crisis, Yea I'm F..king the Maid!  Wink Wink. I hope you and your family are well. I noticed Tyler open a chat "area".

  That is a nice addition to Z/H. I'll( watch), see how it works out.

Mon, 04/09/2012 - 15:56 | 2329144 slewie the pi-rat
slewie the pi-rat's picture

the slewies are all fine, wherever they are, we can hope.  thxz

egypt again, huh?

imo, our resident douchebag banksters have still got everything "screwed down tight";  tyler predicted the "india" bid in gold, yest:  +$13.+; plat + $13.; silver -$0.17 <shrugZ>

europe will re-open tomorrow;  stay tooned2C if they can continue to forestall the rush to the exits by QE ri-fin's...

for those of you long prepH, since only 80% of "accountableBullshit" is underwater at this point, i don't see a problem.  just push the buttons and print

really, why tf not, at this point?  as long as 8BilPeople agree that these moronic colored coupons are worth 10nth the papier&cotton and rfd's, what is the problem?  L0L!!!

{try experimenting w/ the X sub&super-script

so, there was more than one?  we have time...

Mon, 04/09/2012 - 16:00 | 2329152 Yen Cross
Yen Cross's picture

 You forgot J&J  and Treasuries.

                                                Helicoptors and ass wipes!  nice post by the way!

Mon, 04/09/2012 - 15:06 | 2328969 Agent P
Agent P's picture

I know the IRS margins will be improving next year, which makes this seem all the more unlikely.

Mon, 04/09/2012 - 17:08 | 2329354 Common_Cents22
Common_Cents22's picture

Their hiring like crazy at the IRS too.   And gotta love the $500mill handout from brobama to the IRS too!

Mon, 04/09/2012 - 15:08 | 2328975 wombats
wombats's picture

Hope springs eternal.

Hopium feels really good too.

Mon, 04/09/2012 - 15:28 | 2329047 junkyardjack
junkyardjack's picture

As I said, by Monday who is even going to remember what happened on Friday.  New Week, new Hope

Mon, 04/09/2012 - 15:10 | 2328982 MFL8240
MFL8240's picture

The neverending con!

Mon, 04/09/2012 - 15:15 | 2329000 Yen Cross
Yen Cross's picture

 I just had a "Over the Rainbow" epiphany!

Mon, 04/09/2012 - 16:10 | 2329185 slewie the pi-rat
slewie the pi-rat's picture

w/ the nore @ 131+ and the bond @ 140.4, you ain't the only one!

say hi to the man behind the curtain, from all the BiCheZ!

Mon, 04/09/2012 - 16:15 | 2329207 Yen Cross
Yen Cross's picture

 I forgot one thing Slewie. I'm still long aud/usd and aud/jpy. I follow China very closely. When you factor in the carry and fair value, along with debt/gdp, the aud is a pretty good hold! Even if ( RBA) lowers the rate 25 basis points. I think q-1 earnings will be on ( par), and it's an election year.

 Just trade smart and fast! Who is the ass clown that junked me? Show your face pussy!

Mon, 04/09/2012 - 16:44 | 2329277 slewie the pi-rat
slewie the pi-rat's picture

well, as you were discussing with others here, b4, china's resource needs are important to your aussie friends

there was a little hiccup, there, and then more ??? abt china

including the "news" about the political situ;  also internationally, 3 carriers off iran, but not too much sabre-rattling from the shitheaded MIC;  they were probably celebrating holy week, too...?

interesting the two 'shorts' on the crosses;  almost as if you thought "they" were using to yen to support&'takeDown' the dollar...  or rather: "dollar"

Mon, 04/09/2012 - 17:39 | 2329432 Yen Cross
Yen Cross's picture

 China printed solid CPi PPi #'s, and they were off 3 days last week. If you look at GBP and EUR, they are at the higher end of their s/t trading ranges. I'm not impartial to aud, but it is ( oversold on the daily), and has a good fundamental outlook.

  I'm personally doing some repositioning, into aud because s/t,( jpy and usd) are their #2 & #3 trading partners, and I like the 4.25% carry on a low debt /gdp, coupled with Japans loose policy ( recent trade numbers). 

  What do I know though?  I'm long aud/jpy. It takes two sides to make a trade. That's why I enjoy your posts.

Mon, 04/09/2012 - 15:33 | 2329064 insanelysane
insanelysane's picture

March's low unemployment number was due to Catholics not eating meat on Fridays during Lent now that Lent has ended, unemployment will drop and margins will soar!

Mon, 04/09/2012 - 15:57 | 2329147 Shizzmoney
Shizzmoney's picture

"Erroneous! Erroneous, on all accounts!"

Mon, 04/09/2012 - 16:47 | 2329295 slewie the pi-rat
slewie the pi-rat's picture

when the margins first rolled over (see chart), tyler wrote an amazing piece about why and what it meant

shot the fuking bull'sEye out, too,  BiCheZ!

Mon, 04/09/2012 - 18:53 | 2329628 SCswampfoxx
SCswampfoxx's picture

Ok course they bold "only 42% of the S&P 1500 now expected to increase net margins YoY."  That figure has hardly ever been over 60% and has never reached 70%.  So only 42% is not very bad.


89% is obivously retarded tho.

Tue, 04/10/2012 - 02:27 | 2330521 jack stephan
jack stephan's picture

Vincenzo Coccotti: Sicilians are great liars. The best in the world. I'm Sicilian. My father was the world heavy-weight champion of Sicilian liars. From growing up with him I learned the pantomime. There are seventeen different things a guy can do when he lies to give himself away. A guys got seventeen pantomimes. A woman's got twenty, but a guy's got seventeen... but, if you know them, like you know your own face, they beat lie detectors all to hell. Now, what we got here is a little game of show and tell. You don't wanna show me nothin', but you're tellin me everything. I know you know where they are, so tell me before I do some damage you won't walk away from.



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