This page has been archived and commenting is disabled.
Just Two Charts
The 2 words "collapsing" and "unsustainable" do not conjure images of confidence-inspiring animal spirits or all-time highs in stocks... and yet European earnings expectations have utterly collapsed from their exuberant early year levels and the gap between earnings growth in the US and revenues tumbling is entirely unsustainable. But then - none of this 'fundamental' malarkey matters: we've got the Fed 'put' and the Draghi 'promise'.
European Earnings expectations... (down is not good)...
Unsustainable US earnings-revenues gap...
Thank the Lord Fed for buybacks...
Charts: @Not_Jim_Cramer
»
- 23723 reads
- Printer-friendly version
- Send to friend
- advertisements -
Lord Fed? More like Lord and Lady Douchebag. In Yellen's case, it's an and/or. http://www.veoh.com/watch/v17990992nmqFyzgY?h1=The+Party. Skip to 2:40.
Classic.
Economics principle: How to distribute finite resources to people with an infinite desire for them.
Nothing magicsl happens when money is printed or stocks are manipulated. Finite resources have not been solved, only stolen.
http://www.youtube.com/watch?v=rhAlbH-jtPo
it's the summer heat in Europe, all will be better in the fall.....
Of course, all that depends on if you measure in bitcoin.
http://www.cnbc.com/id/101708238
Bitcoin believer Marc Andreessen said that his bet on the cryptocurrency is for the long term.
...
"The other thing that's happening is the number of startups in Silicon Valley that are ramping up right now to build all kinds of applications around bitcoin is staggering," he said. "And so, we're seeing a really interesting flow of early-stage companies that have all kinds of ideas for everything—bitcoin contracts and bitcoin keys and bitcoin title and bitcoin assurance and derivatives and on and on and on, all these different kinds of applications of financial services rebuilt with bitcoin.
"And that process is just starting. And so, that's a five to 10-year process just by itself. And so our plan is to invest in the long run."
But everyone here on ZH knows that Bitcoin is a con.
The fact that top technology visionaries who have seeded and started numerous new ideas are getting behind bitcoin and see the potention means nothing here. Instead it is easier to dump on fonestar all day.
gap between revenue and earnings?---replace the workers with machines.
fixed.
You're also forgetting that these are the same people that brought you pets.com
The longer the wronger.
There you go looking at those silly fundermentals again Tyler. What have we told you about that? Here, have a cookie and soon you'll be right as rain.
The daytime Tylers and the nightime Tylers should really take a meeting. I think we fairly well established that share prices are going up because companies are buying back their own shares at a record pace. Irrelevant the decline in revenues if the rate of decline in outstanding shares outpaces it.
Of course, eventually the number of outstanding shares goes to zero, and debt replaces equity. And if the debt is 100 year notes, they are really not all that much different from preferred stock. So, it is just a change in the capital structure.
A fine point.
It's also worth considering what happens from a governance perspective. Creditors exercising control over management vs stock holders.
I don't feel qualified to express a strong opinion on this. My best guess is that, in the current ZIRP environment, this means a smaller number of big lenders exercising much more control over corporate governance. Fewer brains making more decisions may end badly. I'd expect that products and services would suffer as empowered lenders sought to capture more of revenues, thereby inhibiting self-investment such as R&D, maintenance, staff training and customer service.
I think that was the point of the last line about thanking the Lord Fed for buybacks, which also happened to link to the daytime story.
The first chart's more interesting, though: the decline in earnings expectations is not the same as a decline in earnings, because a provident/devious Europe might have lied through its teeth on earlier earnings forecasts (9%? really?) to reap profit of the credulous before revising them to be in line with reality later. The lesson would be not to trust "expectations" in the land where everyone tells you to expect massive growth to offset the continuing pain of the last five years. And, of course, neither earnings nor earnings expectations need have anything to do with revenue, as you point out.
Bulish
Nicely done Tyler!!!!!!!!!!!!!!!!!!!
I don't know what the second chart is supposed to show.
I'm not sure either. Is it showing earnings per share or total earnings? Same for the revenue side?
We know corps have been boosting EPS by shrinking the number of shares using buybacks. I don't know if this chart reflects this or not.
It is not just buy backs driving the earnings per share but cost reductions in labor. I think the chart was pointing out revenues are not growing and the economy is dead flat.
The crux of our economic woes lay in the fact that over the last several decades we have created entitlement societies on the back of the industrial revolution, technological advantages, capital accumulated from the colonial era, and the domination of global finances. Promises were made on the assumption that those advantages would continue in both Europe and US.
The ever greater prosperity and entitlements would be sustained through debt financed consumption growth. In that eerie fantasy world, debt fueled consumption was to be the catalyst to bring about ever more growth. Now reality has begun to come into focus and it is becoming apparent that this is unsustainable. The entitlements and promises that have piled up have become overwhelming. The article below looks deeper into this problem.
http://brucewilds.blogspot.com/2013/11/the-crux-of-our-economic-woes.html