Picturing The Gap Between Hope And Reality In Stocks

Tyler Durden's picture

Companies will have to increase profit margins to all-time records in order to meet estimates, is the message of utter hope embedded in the forward expectations for earnings and sales growth. As Bloomberg reports, Oppenheimer's Andrew Burkly warns this is "a scenario we view with ongoing skepticism." As the chart below shows, the gap between growth in sales (top-line) and earnings (bottom-line) is set to explode in the next few quarters as even the most exuberant analsyst struggle to upgrade their GDP-riddled sales forecasts and are thus forced to make up whatever margins they need to reflect extrapolated buy-and-hold targets for their stocks. The margin for US companies during Q4 was the highest since 1950 and finding ways to reduce costs and make workers more productive will be an "increasing challenge...earnings growth will have to be pared."



Chart: Bloomberg

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
LawsofPhysics's picture

Again with the "growth" bullshit.  Growth in what exactly?  Financial "products" of mass destruction?  No thanks.

Toolshed's picture

Growth in bankster compensation obviously.

insanelysane's picture

Stagnation is growth in a world of Central Bank printing.  As the currency loses value, the amount of revenue seems to increase even though the number of units sold remains flat.

I buy 1 pound of beef this year at $5 and Beef Inc reports revenue of $5.

I buy 1 pound of beef next year at $7.50 and Beef Inc reports revenue of $7.50.  Is Beef Inc. growing?

LawsofPhysics's picture

The obvious problem being that all those SNAP recipients are "buying" that same beef too.  Hence the SNAP budget must get larger to cover the additional cost. 

Where do those funds come from?  Exponential equations are a bitch and eventually the actual beef producer shuts down because it simply isn't worth working that hard to provide the beef in exchange for the useless paper-promises that they are being given in exchange.


Shizzmoney's picture


Growth in what exactly?


Seasmoke's picture

C'mon there has never been a better time in history, to make up numbers, than right now !!

astoriajoe's picture

What, is the train leaving the station?

MFLTucson's picture

Mathematical growth in a depression to fool those dumb enough to invest in the US ponzi schemes.

bnbdnb's picture

Automation. Everything.

order66's picture

Simple algonomics really.

Toolshed's picture

That is too funny!! Did you come up with the term "algonomics"? It should be added to the dictionary immeditely!!

Whoa Dammit's picture

OT: A DC missile defense contractor kidnapped from his Wake Forest home was rescued by FBI in Atlanta slums.An odd story that supposedly had nothing to do with his line of work.


Two-bits's picture

I see your kidnapped contractor, and raise you missing weapon drawings:

"Classified design drawings used in the manufacture of nuclear weapons have not been properly and reliably maintained by nuclear weapons labs managed by the National Nuclear Security Administration (NNSA), the Department of Energy Inspector General said in a report last week."


pound the vix's picture

Hey, people get paid millions to come up with these numbers.

HRamos_3's picture

Who cares, just buy buy buy the darn thing.


Rising Sun's picture

Fuck right off Barry!!!!!!!!!!!

medium giraffe's picture

92.7% of statistics are made up on the spot.

Uchtdorf's picture

Dude, everyone knows it's 47%. Winning at Statistics!

put_peter's picture

It is very much possible that SP500 has peaked this cycle. At least our model suggests that there has been less irrational buyer momentum since last December. Usually this is a good sign of a market change. However addition of liquidity might change the picture...

medium giraffe's picture

As long as the Fed is pushing people out of bonds, that cash has to go somewhere.  I wouldn't be comfortable making that call just yet.

put_peter's picture

I totally agree with you. There is so much hot money circulating that it is hard to believe it. FED and the other CB:s can of course inject more at their will.

put_peter's picture

Yet the trend is to be confirmed within 1-1.5 months.

Flying Spaniard's picture

The only way to reduce costs even further is if they emply slave labour (aka unpaid internships, outsourcing to third world countires)... Oops they already do that... ok then brainwash the consumer (aka agressive marketing)... Oops they already do that... I am actually running out of ideas!!

Notsobadwlad's picture

Increase illegal immigation to increase market size and reduce costs ... oops they are in the process of doing that too.

Armed Resistance's picture

Force you to buy a commodity that is overpriced and underperforms or pay a fine. Whoops....

HRamos_3's picture

Don't you guys ever get tired of being wrong?

Colonel Klink's picture

Hearing the lie gets old yes, but when the truth finally comes to light it's going to be EPIC!

HRamos_3's picture

How many times will they do the same thing?

How did they get programmed to, your following?

Everyone's locked up in their suffering

The only way you can tell is reconsider everything


What if the truth is that there is no truth

The only thing I can prove is there is no proof

Don't be so sure that your source is correct

People believed it before, before they had checked


How many times can they tell you

Til you just give them their way

How many times can sell you

Til you let them have their say

Every time you will ignore your

Heart it will come back twice more

Never deny your own instinct

Reconsider Everything 


Everybody want something they control

Some just want grass some they want gold

Either way does it feel good or feel low

Taking you down not fast but real slow


Rebellion done for it's own sake

Does not a true free thinker make

To go against for it's own sake

You're still controlled by the course that the other man takes


So you're sure on who's lying, eh?

yogibear's picture

We don't need growth we have fantasy statisticians in the government and fantasy money from the Federal Reserve. 

Get those dancing unicorns queued for trading time!