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Earnings - Hope Is Fading

Submitted by Tyler Durden on 04/27/2013 19:05 -0400

We have long commented on the hockey-stick-like expectations of a second-half 2013 resurgence in EPS and revenue growth. This miracle waiting to happen is, sadly, increasingly unlikely. As Goldman notes, the S&P 500 bottom-up consensus EPS estimate for the remainder of 2013 has fallen 1% since the start of earnings season. Revisions have been most negative in the Materials (-4.1%) and Information Technology (-3.7%) sectors. Managements are guiding well below consensus estimates. Of the companies have provided 2Q guidance, 76% guided with a midpoint below the mean consensus estimate (versus an average of 69% over the past 28 quarters). The median firm guided 4% below consensus (versus 3% historically). However, since the start of earnings season, bottom-up consensus full-year 2013 estimates are down only 40bp; suggesting analysts and serial extrapolators alike have considerable more reality to catch up to yet - but for now, hope is fading a little with EPS, Sales, and Margins expectations for the rest of the year all being marked down.

It seems the hockey stick is starting to droop...

most notably in Materials, Tech and Industrials...

Charts: Goldman Sachs

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Sat, 04/27/2013 - 19:11 | 3506457 q99x2

Who cares. It's not like they are going to cancel my FaceBook account.

Sat, 04/27/2013 - 19:17 | 3506466 Manipuflation

It's not like you could if you wanted to anyway.

Sat, 04/27/2013 - 19:22 | 3506471 flacon

I think we are on the edge of a major market down-draft. I also think gold and silver (the paper kind) will go down with it like in 2008 - but this time the premiums will see exponential increases as the paper price goes down to its intrinsic value.

Sat, 04/27/2013 - 19:53 | 3506521 sunny

"I think we are on the edge of a major market down-draft."

Ahhh, let me see, this is either the 47th or 48th time I've read an opinion about the upcoming market "correction". If you look at the charts, the grand all time high was about 160 points from where the Dow sits now. This was suppose to be the mother of all ugly seasons for earnings reporting with 78% of companies in pre-reporting releases admitted that things were bad. All indices are up 1%-2% from April 8 when earnings season started. Life's a bitch.

I predict that the markets will crash, politicians will turn honest and the universe will end. I'm just not sure when.

sunny

Sat, 04/27/2013 - 20:10 | 3506541 TheSilverJournal

I think we just saw the last deflation scare with this last PM sell off. Look how low bond yields became. It's up up and away from here as the market front runs the coming ramp in QE.

Sat, 04/27/2013 - 22:49 | 3506853 markmotive

It may be a farce, but at least we can eat and have a warm bed. I think we sometimes forget that we're quite well off compared to the rest of the world.

My hope won't fade until I'm swimming in a sewer for pennies like this guy:

http://www.planbeconomics.com/2013/04/the-worst-job-in-world-sewer-pipe....

Sat, 04/27/2013 - 23:21 | 3506883 knukles

Eat drink and be merry 'cause it ain't gonna be getting any better, just worse.
Even some of my more "Optimistic" buds are starting to figure somethings wrong... badly wrong.
But WTF....
Hockey stick global warming
Hockey stick earnings
Hockey stick GDP
Hockey stick employment
Hockey stick retail sales
Hockey stick investment
Hockey stick world peace
Hockey stick housing
Hockey stick oil production
Hockey stick political progress
Hockey stick Fed policy
Hockey stick Fiscal policy
Hockey stick lawful conduct
Hockey stick racial progress
Hockey stick personal income, nominal
Hockey stick personal income, real
Hockey stick no inflation
Hockey stick wheteverthefuckyouwant

Booyah

_{^{Oh don't worry honey, the starving urchins love to pick up the red hot pennies, they think it's fun, too! May the Unicorns of Happiness Depoist Rainbow Colored Skittle Shit in All Your Meals}}

Sun, 04/28/2013 - 00:07 | 3506937 Western

Every time I see your avatar I think of Sloth from the goonies.

Sun, 04/28/2013 - 09:31 | 3507295 BandGap

Zippy the pinhead

Sun, 04/28/2013 - 07:07 | 3507147 Satan

I have successfully predicted 11 of the last 3 crashes.

Sun, 04/28/2013 - 07:38 | 3507170 GetZeeGold

Hell of a track record there.....no pun intended.

Sat, 04/27/2013 - 23:38 | 3506901 algol_dog

God, don't ya all get sick of trying to call the top. These markets are never going down in any meaningful way for a decade to come.

"Learn it, know it, live it" ~ fast times at ridgemont high ~

Sat, 04/27/2013 - 19:46 | 3506504 kchrisc

FaCIADossier--"You can cancel anytime but you can never leave." hujel

Sun, 04/28/2013 - 07:24 | 3507154 geewhiz

I don't know if we are allowed to keep our facebook accounts in the FEMA camp.

Sat, 04/27/2013 - 19:18 | 3506463 Dr Benway

My question is, how much of reported earnings were directly due to the share market rise, unrealized profits on companies' share portfolios?

In Australia, the financial sector is a third of the sharemarket's value, and the sector's earnings are directly driven by the perfomance of said market. Circular much?

Check out my presentation on crossholdings, inflated assets and other fraud:

http://s1144.photobucket.com/user/_DrBenway/library/The%20Great%20Australian%20Investment%20Ponzi?sort=6&page=1

Sat, 04/27/2013 - 20:02 | 3506529 Seize Mars

Ben-Way

Yah I remember reading your stuff, I think some time ago. Very well done. Keep up the good work.

Sat, 04/27/2013 - 21:21 | 3506672 Dr Benway

Thank you, Seize Mars, much appreciated!

If you would like to see the updates in chronological order, they are here: http://s1144.photobucket.com/user/_DrBenway/library/?sort=6&page=1

Sat, 04/27/2013 - 19:17 | 3506465 Atomizer

Bernanke Exit Strategy

Some within the Fed, especially on the hawkish wing, worry the unprecedented bond buying will disrupt markets or feed asset bubbles, stoke future inflation, or lead to political interference if the central bank starts suffering losses on its balance sheet later this decade. The balance sheet could rise to $4 trillion by year end if QE3 continues apace. While the Fed is transferring large profits to the Treasury now, it may run into the red if it sells these assets when longer-term rates eventually rise. At the meeting, some officials worried about future asset sales. Several thought a decision not to sell mortgage-backed securities, or to sell them only very slowly, would mitigate financial stability risks and also "damp the decline in remittances to the Treasury at that time," the minutes said.

Sat, 04/27/2013 - 22:49 | 3506856 disabledvet

well i guess they better keep QE'ing then...

Sat, 04/27/2013 - 19:25 | 3506480 Manipuflation

Hope? I lost faith in that before ZH ever existed. Hope of what exactly? The truth, or finding out the enemy combatants? They seem to be the same.

Sat, 04/27/2013 - 19:43 | 3506498 CrashisOptimistic

It would be more meaningful economically (not trading wise) to have a look at earnings as dollars. Not per share. Total dollars.

There have been a great many stock buybacks done and it's corrupting and obfuscating the deflation in the general economy.

Sat, 04/27/2013 - 19:44 | 3506501 Kirk2NCC1701

I see two opposing camps/cruise-ships/themes in the MSM and sites like ZH:

1. Camp Fed et al (CNBC, MSM, etc) = We will maintain course until we have reached that distant shore that appears ever closer

2. Camp Contrarian (ZH, etc) = We will sink before we ever reach that shore

While the contrarians are keeping close to the lifeboats (bullion, real assets), the Fed party in the Wallstreet ballroom sure is mighty tempting to see and hear. And maybe pop into for a quick dance, drink and banter.

There's also a 3rd cruise-ship that's getting closer and has a golden shimmer: The BRIC⁺ ship.

Time-sharing between ballroom & lifeboats, anyone? Or shall be take a boat or chopper over to the BRIC⁺ ship? ;-)

Sat, 04/27/2013 - 19:51 | 3506513 CrashisOptimistic

You have it wrong.

Camp 2, Contrarians, are "conservative economists".

Camp 3 is ZH. There is no distant shore. This shit is going to unravel while sailing to nowhere.

Sat, 04/27/2013 - 20:07 | 3506540 B2u

No, the earth is flat with no end. No need to worry about going over the edge because there is no edge. I looked out my window and the earth looks flat to me.

Sat, 04/27/2013 - 20:13 | 3506546 akak

Thomas Friedman, is that you?

Sat, 04/27/2013 - 20:18 | 3506556 Manipuflation

No, it was Jon Nadler in disguise.

Sat, 04/27/2013 - 20:21 | 3506564 akak

Oh, you mean like with a pair, and being honest about gold?

Sat, 04/27/2013 - 20:49 | 3506622 Manipuflation

Remember all of you PM vets... Ask yourselves if the kids are figuring it out. If not, than why not?

Sat, 04/27/2013 - 22:53 | 3506861 disabledvet

eh. "we've already destroyed everything" that's where i'm at. "unfortunately we've only made it to the third circle of hell and there are seven."

Sun, 04/28/2013 - 01:36 | 3507022 Manipuflation

I would not throw in the towel just yet on the dark avatars.

Sun, 04/28/2013 - 18:53 | 3508399 bluskyes

Some older friends of mine were telling me about their 7-year-old grand-daughter. She had accumulated a bunch of change, and her grand-mother told her that she should roll it up, and take it into the bank. The girl flatly refused. When the grandmother asked "why not?" The grand-daughter said: "I don't trust banks"

I was quite impressed.

Sat, 04/27/2013 - 20:23 | 3506577 Apostate2

No, the earth is curved so you can't see that far down the road.

Sat, 04/27/2013 - 22:22 | 3506807 A Lunatic

There is no Earth, only the matrix..........

Sat, 04/27/2013 - 22:52 | 3506858 Atomizer

Nonsense, everything is a learning process. You will begin to see, in very near time.

Why am I here?

Sat, 04/27/2013 - 19:52 | 3506515 kchrisc

BRIC?! Like throw a BRIC in the works?!

Or shit a BRIC?!

Is that a BRIC in your pants or are you happy to see me?! hujel

Sat, 04/27/2013 - 20:08 | 3506538 Tulpa

The BRIC countries have major problems of their own. One thing I've noticed is that ZH's (justified) pessimism about EU/US/JP seems to draw a scatload of PRC/Russian propagandists in the comment sections.

Sat, 04/27/2013 - 20:12 | 3506550 Manipuflation

Captain Kirk. I think most everyone here appreciates your fervor both young and old. I have been on the BRIC ship and it is no better than what we have in the "West". What is the "west" anymore anyway?

Some of us have been on a few more trips around the sun than you have been. Why would you think that we can not see it too? There is really no where to run. We will have to turn around and face what it is we are up against. They are stealing people's wealth via the "market", but it is too late.

I only wonder if I have enough silver dimes, as do some others, to get a local economy going again based on trade of silver for goods. Silver dimes in successful trade negates the need for me to use my guns in aggression. Mr. Ludwig von Mises might agree.

Never go full retard.

Sat, 04/27/2013 - 20:53 | 3506626 Kirk2NCC1701

Clearly John Grisham's job is safe, and my writing needs improvement, as my intent and cheeky irony went over the ship's sides.

I am in the camp that's by the lifeboats, but I'm "coveting" the ballroom party inside I'm missing out on, and thinking about popping in for a quicky of fiscal fun.

I'm also mindful of that BRIC ship (with its glitter and problems), and almost wrote "...shall we pull a Simon, and ferry/fly between the ships?". And yes, I realize how risky or costly a ship-to-ship transfer sounds in the context of my naval metaphor. Cheers.

Sat, 04/27/2013 - 21:26 | 3506673 Manipuflation

Plussed you for that one Kirk. No one called you a fool that I can recall. How are your children? Bro, chill out a bit. No one has really stood up against you yet from the old men forum. That should be a clue. Young man, you do know that some of us have been around for a long time on the interwebs?

Sat, 04/27/2013 - 20:22 | 3506573 nmewn

"While the contrarians are keeping close to the lifeboats (bullion, real assets), the Fed party in the Wallstreet ballroom sure is mighty tempting to see and hear. And maybe pop into for a quick dance, drink and banter."

Good comment, a lot of elements to consider.

Yes, temptation is a large part of the game. So is risk management.

I can't say I'm immune to temptation & opportunity as it presents itself (moving in, collecting a scalp, then backing out) but the days of all-in, balls to the walls are long gone never to return...for me.

To your larger point, a lot of it also depends on the perception of standards, the fairness, the stability of sovereign(s) law, the likelihood (or lack thereof) of seizure/confiscation of "paper assets", even the domestic tax complications if everything goes according to plan. Its all part of the equation of risk management.

Then we move to the morality & ethics of investing in, say...a China or a Russia. Not to say the western world has made wonderful strides in addressing its decaying moral virtues & continuing ethical lapses but so far, the algo's rule supreme, if only making a buck was the intent ;-)

Sat, 04/27/2013 - 19:47 | 3506510 Colonel Klink

Fuck you Goldman Ballsack!

Sat, 04/27/2013 - 19:58 | 3506522 JimBowie1958

While the vast majority of us would probably live through an economic meltdown, it might prevent me from getting my high score in LOTRO.

I only hope that the fucking assholes responsible for undermining our economy suffer as much as the people they have sent to the poor house.

Sat, 04/27/2013 - 19:57 | 3506524 yogibear

A BRIC is about ready to be thrown at the Federal Reserve Open Market Committee.

Sat, 04/27/2013 - 20:05 | 3506533 Tulpa

Look for your profits, but do not trust to hope. It has forsaken these markets.

Sat, 04/27/2013 - 20:04 | 3506535 Seize Mars

I'm just waiting for the next Government attack against Americans.

Bombs? Bullets? Airplanes? Disease? Nukes? They're running out of ideas. The old plays aren't working.

They're in danger of becoming...boring

Sat, 04/27/2013 - 20:17 | 3506562 buzzsaw99

earnings, lulz, like that has anything to do with anything. there is no market, there is only the bernank.

Sat, 04/27/2013 - 20:51 | 3506621 nmewn

Buzz speaks the truth. There is only the bernank.

I'm betting debt does in fact still matter or they can pull the plug on taxation without representation and all that entails.

Meaning, if the country as a whole, is appalled by the debts & deficits being rung up by their representatives on their children and they continue to do it and Benny continues to counterfiet the national currency to oblige them, there comes a breaking point away from all the above.

Sat, 04/27/2013 - 20:20 | 3506563 I am Jobe

More Fuckbook, Dell,HPQ, IBM and other social medias needed to keep sheeples happy and give em hope.

Hunker down folks gonna be rough ride.

Is Dell laying off yet? Seems like they are taking a beting or more like azz whipping

Sun, 04/28/2013 - 00:09 | 3506940 yogibear

Hp in the US is laying off.

Sun, 04/28/2013 - 07:41 | 3507172 GetZeeGold

.....with orders for the rest of those still employed to not get sick.

Sat, 04/27/2013 - 20:34 | 3506593 Tombstone

Thanks to Benny, reality doesn't matter anymore. Stocks will continue to rocket higher as we now have central banks buying stocks. Will they grow a brain and buy gold next to protect themselves from self inflicted suicide?

Sun, 04/28/2013 - 00:08 | 3506938 yogibear

All in the effort to paper over everything.

The US dollar crisis and it's loss of the reserve currency status will be quite a mess.

Sat, 04/27/2013 - 22:31 | 3506830 A Lunatic

If the data is manipulated, the charts don't mean shit, especially Goldman Sachs charts...........

Sat, 04/27/2013 - 23:40 | 3506903 Atomizer

Good night Janet Napolitano. You need to have a press conference no later than Wednesday to keep your train from falling off the tracks. Sorry I couldn’t stop by to relieve your stress with a massage. Snickers..

Sat, 04/27/2013 - 23:46 | 3506909 Cabreado

When now the motivation of all parties involved is to protect the lie, there are no forces left to stomp it down.

We're eating ourselves up.

Sun, 04/28/2013 - 00:14 | 3506944 Next to Arch Stanton

Just need to vent a little here. Post dinner, several drinks into the evening.

My hope has been fading for a while now. Ever since I realized I was not thinking deep enough. Ever since I started reading this blog and others. Ever since I stopped reading headlines and watching TV. Waiting for this crash is frustrating - not looking forward to the carnage but I'm so tired of not speaking my mind when work colleagues or friends talk about the economy getting better. I cannot mask my feelings on this - my wife has warned me I am annoying some of our friends (although they are annoying me too). The irony is I work at a bank (not a TBTF) lending money. I'm supposed to be growing our portfolio but I see major problems soon; with a conscience, it makes the job tough these days.

These are frustrating times. I think I have done everything I can to prepare, short of selling my house and moving somewhere rural to be more independent. I wish I had more capital to deploy to PMs but I am tapped out.

I have to say, I am really impressed with some of the analysis and genuine independent thought that I see in the posts and comments on this blog. For me, this site is therapy and enables me to cope better. I have no doubt my thinking has evolved over the past year and a half. If I had my way, I'd have my kids read this blog instead of going to college (I'm still working on that plan - have another 5 years to convince my wife colleges dont matter anymore). I appreciate the people who can listen to an argument and call BS or have the courage to contradict an "expert", etc. Sadly, that's a characteristic which is relatively rare.

Probably feeling this way because it seems like things are coming to a head. Gold smackdown, Europe cluster-fuck, geopolitical tensions in multiple spots - I don't know what will happen or when, but current status quo seems unsustainable.

Feel a little better, but not much. One more drink should do the trick.

Sun, 04/28/2013 - 00:28 | 3506955 Cabreado

Voicelessness confounds the psyche, and suffocates the soul.

"I'm so tired of not speaking my mind"

Bravo to you, Sir, for being Human.

Sun, 04/28/2013 - 00:35 | 3506964 W T F II

Next,

Hang in there. my wife warns me as well. The s#!t is hitting the fan as we speak and we probably topped out on Apr 11th and will see a wicked sell-off, even a flash-crash now. As in this coming week.

The thing is you will not be welcome to share your thoughts then either. Most friends and family will lash out at you after the fact for being the kind of negative energy folks who brought on the crash. That's just human nature. Nothing you can do. Just live and prosper..!!

Sun, 04/28/2013 - 00:48 | 3506975 StychoKiller

Let the "Green Fairy" take you there!

Sun, 04/28/2013 - 09:25 | 3507286 Manipuflation

In the USSA, we are not allowed to have "flavoured" drinks that contain wormwood extracts. Can't have any Cuban cigars either. It is for our own good I am sure. {sarc}

Sun, 04/28/2013 - 06:59 | 3507138 geewhiz

Welcome to the world of the red pill. Even though it causes nausea it is beneficial to your wellbeing. You shall know the truth and the truth shall set you free.

Sun, 04/28/2013 - 07:40 | 3507171 Gold Eyed Cat

LMAO I remember that day in 2008. Here I am being an awesome consumer, feeling great about my house and 3 vehicles and 401k and retirement contributions. I was so proud about being ahead of the game that I took a minute to really look around the table to laugh at all the dupes. Thats when I realized I was in trouble.

Sun, 04/28/2013 - 01:17 | 3507013 barroter

No worries. If this effects unemployment, QE can morph into the 4th dimension.

Sun, 04/28/2013 - 04:05 | 3507071 The Heart

How anyone could be concerned about having anything in the future of no connection is a wonder to ponder. As long as this crazy train keeps on a keeping on, nothing seems to be able to stop the real problem of corruption and phony-baloneyism that is slowly taking down the whole world. This is darn sad indeed. Sad to think that so many gave and sacrificed so much, are still doing so, and in the end, all will be for nothing. How can a free civilization survive in a Zionazi world? This is like some kind of science fiction comic book. No wonder hope if fading...

..."the whole agenda is full of lies."

http://www.youtube.com/watch?v=OWkrwRTaZa8

Sun, 04/28/2013 - 06:47 | 3507133 geewhiz

Heil Shalom

Sun, 04/28/2013 - 04:34 | 3507086 cdude

"This miracle waiting to happen is, sadly, "..... coming this June as a re-formulation of GDP wherein "intangibles" will plump the figure 500 bln. Sort of like Mark to Model for the entire national economy.

Figures never lie, but liars often figure- Mark Twain (?)

Sun, 04/28/2013 - 04:35 | 3507087 enloe creek

all I know is there is bankruptcy coming. with the western world living high there are many many people receiving wages for useless service. I mean really unproductive service that is redundant and wastes resources to do it.

when people talk about historical countries defaulting they are speaking of countries that had much less of this kind of activity, people worked to produce in the old days. today the producers are a slim minority in the U S.

when we get deflation from the bankruptcy that is coming it will be deflation in the value of the useless sevice providers not deflation of the producing minority.

so it you are a producer your value will rise and your service will be valued. all others better have some gold or you will starve.

Sun, 04/28/2013 - 08:38 | 3507233 overmedicatedun...

enloe, all those worthless jobs (i agree) were the main goal of .gov- out source productive jobs , create via rules and regs a "green economy" : finance, retail,law,education, social services,entertainment: viola the economy of paper pushers, but very green and low energy consumers..how well has that worked?

Sun, 04/28/2013 - 09:11 | 3507271 Son of Loki

Best sign of the state of this economy; Gwenyth Paltrow chosen as the world's most beautiful woman.

Sun, 04/28/2013 - 09:55 | 3507323 Notarocketscientist

Formula is earnings down add QE = stock market up

Sun, 04/28/2013 - 11:05 | 3507424 slingshot

But in the first quarter, revenue is coming in 0.6% lower than in the year-ago period, down from the 0.9% growth expected at the beginning of the year, Butters says. Just 44% of companies have beaten revenue estimates, while 56% have missed, making it the third quarter in the past four with more cases of revenue falling short than coming in better than expected.

Lower revenues, profits up based I guess on improved efficiency ie no raises, reqiring employees to pay more for health care, lower borrowing cost mostly.

All that really counts is central bank printing. Old style valuations no longer mean anything.

http://www.usatoday.com/story/money/markets/2013/04/28/first-quarter-earnings-revenue/2116147/

Earnings - Hope Is Fading

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