It’s official: all the markers of manias both past and present have now been surpassed.
NASDAQ™ new highs? Check. All major Indexes both in actual terms as well as adjusted for inflation? Check. Earnings reports being enthusiastically reported as more “beats” than misses? Check. How about employment data? Yep. Within statistically accepted range of near full employment. How about all the macro data? Is it supportive of such a move? Absolutely! And getting better with each release. For Bad is now good, and worse is – excellent!
All of the above sounds great to the uninitiated person on the street. The only problem is as you may now understand the real truth is: that specious (i.e., superficially plausible, but actually wrong) has replaced true/truth – as fact. And in my opinion not just superficially. It now seems how most, if not all financial matters are reported. At all levels.
It is in this context that explains why the average person as well as rudimentary “investor” in some 401K plan is both confused by what they hear, as well as disinterested. The default position when it comes to topics such as these (i.e., data deciphering) is to not pay any mind and just “hope for the best.” There’s no greater example of this than the unopened 401K statement that arrives in the mailbox.
In times of distress, market gyrations, confusion and more. The default thing to do by nearly all “passive investors” is to – not open the envelope. Using this frame of reference it should leave no wondering why channels like CNBC™ aren’t tuning in viewers, but actually turning them off. So let’s take some of the opening paragraph and put the implied references against the true meanings of what has been reported thus far.
The indexes have all once again hit “never before seen in the history of the markets” highs. Once would infer that the economy should then be tearing along at a pace relative to such strong “market” forces. Yeah, not so much.
One would think an “earnings beat” would mean just that: beat because they earned more money than projected. No. You “beat” because of financial engineering. i.e., GAAP vs Non-GAAP. This is where “fake it till you make it” takes on a whole new level of meaning in the corporate world.
Take Amazon for example. Earnings? You mean as in make money over and beyond operating expenses where net profits are the end all be all measurement of success? I would answer that with: “Why start now?” Nearly two decades later since becoming a public company, reporting less than expected losses has now morphed into some meme resembling “They killed it this quarter! They’re raking it in.” But (and it’s a very big but) the story and narrative doesn’t stop there.
Again, nearly two decades later the “analysts” across the financial media are touting why; not only can their stock price go even higher bypassing the Moon, Mars, and any other near galactic measure straight towards Alpha Centauri. It will do this because of the realization the “profits in their retailing efforts aren’t as profitable as their profits in their web services. And that will mean more focus to the web service side.” Wait…What?
First of all one must ask: What profits in retailing? Maybe it’s just me, however, I don’t recall a profitable earnings release in the way I as a businessman understand profits to be. i.e., sale price – minus all costs – resulting in a net profit. All I’ve ever known or heard is, “They only lost X this quarter instead of Y.” And now nearly two decades later the meme is turning to, “Yeah, forget about all that “retailing” stuff. The Cloud is where they’re gonna kill it! Just you wait and see!”
Well, we’ve been waiting two decades for retailing, they’re already a decade into the web service thing, I guess we’ll just have to wait another decade to see. Because if what they reported for “retailing” is true: It’s last twelve months bottom line is now negative $406MM. The worst since 2001. And what did the share price do on all this “bad is now good news” do? You guessed it. Never before seen in the history of the company as well as markets new high. Alpha Centauri – here we come!
This is not to pick on Amazon. As a customer I have nothing but accolades. However, on a stock price and the financial market reporting of that price and how and why it got there? Please, pass the unicorns and rainbows to the next in line. I seem to be a little full. And they do! Going right along dishing it out as in touting next how Facebook™ – is now “killing it!”
Facebook from what I garnered added more “eyeballs” this report than last report. What I didn’t see was based on GAAP numbers was if they made and kept more “net profits” this time than last time. And if “net Income” means anything. Via GAAP Q1-2015 was $512MM. That’s down nearly $200MM from the prior. Or, said more succinctly: nearly a quarter of a BILLION dollars less than the previous report. (I use the BILLION reference because in Silicon Valley, millions is for paupers, Billions is what you need to be garner attention.)
And not to seem like I’m “cherry picking” numbers, for it is true Facebook’s Q4 reports are normally greater than Q1 I’ll use Q1 of 2014. Surely they must be making more money with more eyeballs 12 months later no? No. Q1 2014 $642MM. via reported GAAP.
Wait, that means revenues are over 1/10th of a BILLION dollars less than the prior comp? Yes they are. Unless you want to use Non-GAAP. There you can make $512MM into $1.189 BILLION just by adding some unicorn tears. To me, Silicon Valley’s tagline should resemble something along the lines of: “Hacking – it’s not just for coding anymore.”
And the stock price? Well, it’s still high, but it seems it may be needing some additional rainbow magic before Wall Street finally realizes or further contemplates: If eyeballs are the resource to sell more ads to advertisers. Then why isn’t an increase in eyeballs generating corresponding increases in profits?
Unless, those eyeballs are growing from more unemployed users with more time than money to waste on Facebook. Or worse: All those new eyeballs – are newly employed eyeballs whose job is to “click”, and “follow,” and “like” etc., etc., pages or stories on Facebook. Just something to contemplate. For after all, if “eyeballs” is the true metric of success: Why is Yahoo™ struggling? Or better yet, Alibaba™? Yet, the NASDAQ? Onward towards Titan while singing the line “and the band played on…”
The S&P 500™ and the DJIA™. You guessed it. Here too the phenom of GAAP vs Non-GAAP plays out. One look inside a report or listening to a conference call like that of the bell-weather of global economic health Caterpillar™ and one sees nothing to write home about. Unless you’re writing letters of caution.
However, just like the tech index these are also hitting gravitational release heights. And how is this being accomplished? Again: Easy, bad news is not only considered good. It’s now empirically: excellent! The worse the macro data reporting of the economy in both data as well as meme – the more hardened the notion the Federal Reserve wouldn’t dare raise interest rates this coming June.
You see, we’ve decoupled from anything resembling true economics long ago (which people like myself were and still chastised for even suggesting) and now it’s routine for both the financial, as well as main stream media, to allude that the “fundamentals” for the markets to continue rising has nothing to do with “true financial health and measurements” it’s all about: “whether or not the Fed. will or will not raise rates.”
I guess even they can no longer control themselves from laughing out loud when they have to try to and speak to the meme “This market is rising based on fundamentals.” (I can’t type that myself without snickering)
U.S. Macro data as of today is the worst it’s been since the preceding days of the market crash bottom in early 2009. The markets of today based on data that’s the worst in 6 years – have now nearly tripled! From 700-ish to now over 2100.
Yet, being at this level one would think we’re still proceeding on this “space shot” in a straight line as we’ve been over the last half decade since the market bottomed. No, in some respects we seem caught in the gravitation pull of “reality” that many of the scientists tell us “fundamentally speaking” is just a theory. However, in truth it’s trying to reassert as to prove – it’s the Keynesian mad scientists that are not basing facts within reality.
As we edge higher there’s no acceleration of momentum, just residual. Volumes are not increasing, they’re dwindling. Professional traders and more are leaving the markets. The “pits” at the exchanges that were once the lifeblood of the markets have more in common with pitiful when it comes to describing activity within them. So much so the CME™ closed many in one fell swoop just this year. The S&P large contract pit housed at the CME where everyone references in their mind’s eye when thinking about Wall Street and what takes place in those pits now routinely has less than 75% of the participants interacting. All this when the markets are at the highest. Sorry – something is fundamentally wrong with this picture.
Oh wait, maybe this picture shows the new “fundamentals” of today’s markets. Below is a chart of where we are, how we got here, and how we’ve been able to stay whenever the market has hiccuped. (chart source Bloomberg™ via screenshot at ZeroHedge™)
Welcome to today’s example of “one picture is worth a thousand words.” Where the new fundamentals are, what we were told, are not. i.e., The only reason why these markets are trading at these levels is based solely on the fundamental fact the Fed. is the one holding it up in its entirety.
It doesn’t take a rocket scientist to look at the above chart to interpret escape velocity based on macro data was rejected and began falling back to ground speed precisely at the time the realization of QE was indeed not only going to end – but did. Only to be saved with the now famous (if not infamous) “stick save” supplied by St. Louis Federal Reserve President James Bullard when he quipped the Fed. was open to initiating another round of QE if needed.
Since then we’ve regained the “umph” needed to overcome stall speed and subsequently every time the rocket boosters seemed to be failing another Fed. official has come out in a press conference, interview, op-ed, ___________(fill in the blank) to state in one form or another “don’t worry, be happy.” And the markets have shrugged off all other implications for bad data and now the interpretation is: Bad is good, and worse is Excellent!
Although, if one is to take a second gander at that chart another funny thing is also revealing itself. For all the talk and now open speculation that we could see a NASDAQ 10K in the not so distant future. Over the last 7 months since that Sept. 2014 peak – we really haven’t gone that much further.
I mean, all these gyrations and we’ve only traveled a mere 100 S&P handles in over 7 months? We used to travel that distance in month! What changed? Did something “fundamentally” shift in the markets to cause such a slowing? Yes it did.
Welcome to the first Qtr. without QE. And so far, it’s been nothing more than questionably pathetic if not out rightly so. And this market bubble has shown the only way its going to remain at these heights for much longer is another infusion of “hot air” from the Fed.
The market just better hope the Fed. doesn’t believe all the financial media hype. Because if they do: a raising of interest rates of just 1/4 of 1% has the implications of taking this hopium filled market – and turning it into a lead balloon filled with cement faster than a HFT can spoof a buy or sell order.
We're on the road to nowhere
Come on inside
BULLISH, I mean, bullshit.
Russia Inks Nuclear and Defense Deal with Argentina
http://www.bbc.com/news/world-europe-32443264
hope that includes "mutual" defense of the Malvinas and Vlad gets a chance to rub Cameron's nose in it.
for those that don't know: malvinas is what the losers of the falklands war, call the islands.
a lesser known fact: the falklands war extended 600 miles east to a little known whaling outpost called south georgia island.
basically, some monkeys posing as scrap metal dealers, infiltrated south georgia island and raised the argentine flag.
then, the monkeys waving union jack flags, got outraged and flung some poo at the argentine monkeys, and scared off the argentine monkeys from their god-forsaken frozen rock in the middle of the south atlantic.
the wikipedia writeup of the battle is interesting / funny:
http://en.wikipedia.org/wiki/Invasion_of_South_Georgia
Battle of Grytviken
You have a very interesting literary style :-)
Poop-throwing monkeys , you say . . . .
They'll tell you what to do, but they'll make a fool of you.
Praise President Obama! The stock market is at an all time high, gas is cheap, he saved the auto industry, everyone has cheap health care and he killed Osama bin Laden. Oh God, I love our President! Plus, he is so funny and cool! I wish we could have him for eight more years.
Be careful what you wish for....
Oh, I think he's planning on never leaving.
I really have a hard time watching this current range breakout to a new high...........but it's right at the door knocking. The way this crap keeps bouncing back there really isn't a reason to believe it won't and most likely happen anyday this week. Who knows, but looking likely. All this talk about 'short of a lifetime' buy a guy who has $10 million inflows .........yeah right.
Crucified: Ukraine’s US-backed Azov Nazis nail pro-Russia fighter to cross, burned alive (VIDEO)
Those fucking savages are Made In amerika !
Who's chumming the water for short traders?
The sharks are circling.
AMZN 500 end of the day tomorrow.
TULIPS....we haven't gotten into the tulips yet.
It's all green! Skittles and rainbows! Glorious Unicorns!
To the moon! Moar! Moar QE! Moar debt! Moar, Moar, Moar!
Bull-Tard and the rest of the Fed PhDs are going to blow this bubble so large it will be unreal when it pops.
I still want to know WTF "Macro Data" is. Is it simply Bullshit to feed to Doom Porn industry? I know that the Effing GDP data sucks - 1/10 % via Atlanta Fed staff (amazing in and of itself they publish such tripe - no?). All the Effing data sucks - which as we know is GOOD.
BUT WTF is US Macro Tylers?
This the deal, get yourself a bunch of Unicorns (Quants) and rig that news...there's a name for it, Astro Turfing if you haven't heard the term yet and it's easily done when Journobot do the news...and will you pay 20 cents on a credit card soon to read this stuff? All the big guys, WSJ, NYT and more are reported to be in with this new start up that will do just that. Of course, add on the Facebook streams of major news too and it's a bot-bot world.
http://ducknetweb.blogspot.com/2015/04/news-rigging-has-arrived-astroturf-and.html
One step closer to Vonnegut's "Microsecond Arbitrage"...
Chitty Bang Bang, Chitty Chitty Bang Bang
Chitty Bang Bang, Chitty Chitty Bang Bang
Chitty Bang Bang, Chitty Chitty Bang Bang
Oh, you pretty
Chitty Bang Bang, Chitty Chitty Bang Bang
We love you and our pretty
Chitty Bang Bang, Chitty Chitty Bang Bang
Loves us too
High, low, anywhere we go
On Chitty Chitty we depend
Bang Bang, Chitty Chitty Bang Bang
The more glitz from the media and the PTB the more you see the truth when you travel down small town mainstreet. Look at our small western towns. Or at what is left of them. For sale. Local store and motel owners who believed in 2008 are running on empty now or already closed. People living in junked school busses next to the railroad tracks. The flashing vacancy sign at a motel where the owner jumped in and decided to buy all new mattesses during Wyoming's oil boom. You'll never see it on prime time news hour and you'll never hear O-Ass-Hole Bummer mention it duing his save-the-nation pep talks but America's blue collar flesh and bone is holding on by the tips of their rough calloused fingers. Stock market at all time highs? But not with the companies that created and held America. Not by the industrial CATS. No, now the market is led by consumer crap AMZN, AAPL, et al. Bitter is not good for a person but it is difficult not to be bitter listening to all the hype when the local tire shop cannot even stay in business. F Obama.
If you're thinking this is all O's fault then you're not getting the full picture... (EVERY failing civilization/empire was championing itself right up to the bitter end.)
One day people will "get it" that this path was set a LONG time ago ("go forth and multiply"). The fault likes with the growth paradigm. The ONLY question that ever existed was that of WHEN, when would we hit the wall.
Looks like we've been wrong about [the non-existence of] unicorns!
Oddly, the previous POTUS telegraphed it: "Make the pie higher." Seems it wasn't an imbecilic statement after all...
I don't know what the market is going to do, but there is an awful lot of money out there because of QE, and it has to go somewhere. Because of ZIRP there just aren't a lot of choices. The government is spending at an incredible rate. Most of the market is owned by governmental entities, which have to park their cash somewhere between the time it is appropriated and the time it is spent. I wouldn't be surprised if the market were to continue up indefinitely. There will be corrections, but where else is all the money going to go? Don't listen to me, but don't be surprised either.
"I wouldn't be surprised if the market were to continue up indefinitely."
You really think that reality/physics can be trumped? Perpetual growth on a finite planet isn't possible, despite our finest efforts at hubris.
@Seer
Of course I agree with you. All things come to an end. I'm not advocating anything - I am simply asking the question of where else is all the money going to go? I expect there will be corrections - some major - but I don't see anywhere else the money can go. Do you?
The "money," as we know it today, essentially goes away. If one steps back, removes all blinders, one can see that what is happening is nothing but a huge recall. Companies are pulling out of the markets: buying back shares so that they reduce being undercut by rapid stock trading; this won't, IMO, "save" them, but it's more of a natural protective means- it's all about how long one can go, everything eventually ends (we can't purchase a ticket to immortality; even companies, though not mortal, cannot last forever).
The "system," regardless of how corrupted it has become, was, and even down deep under it's hugely corrupted layers, is STILL about allocating precious/limited resources. There has been, and always will be a need to deal with such allocation. Will it be via central-electronic-bit control or will it be via clubs, that's the question: and then this too comes down to: for how long?
Physical assets. Humans have and will always fight for LAND (LAND is how we actually survive).
Your assertion is that the stock market has some sort of natural law tied to it...it's a bullshit casino made up by man and it does what they say it will. The upside is controlled and so is the downside, that's why when it crashes it doesnt go to zero it just gets cut in half.
This thing can go up forever and ever even if no one has a single penny invested in it. It's just data it's manipulated and faked and forced and complete bullshit.
The only question is what does Dow at 25,000 or 40,000 mean? What will our fiat paper look like relative to these prices?
You're reading into what I said what YOU want to read in to it. I am stating that it, the stock market, like everything else, cannot escape the laws of physics.
"This thing can go up forever and ever even if no one has a single penny invested in it. It's just data it's manipulated and faked and forced and complete bullshit."
We have to then identify how long "forever" is as well as how many people are actually privvy to the data.
At some point that which we refer to as "the market" wiill serve so too few people that it can no longer actually operate, regardless of what "operates" really means: really, I don't think that the propaganda campaign can be held up by a few rich folks- eventually the loss of "scale" pulls the plug.
I'm not arguing that it's not all fabricated: nowhere does ANY of this exist naturally, in nature. What I'm arguing is that eventually the emperor's nakedness is all too visible and that people can no longer pretend, they can no longer go along with the charade: "emperor's nakedness" to be substitured by "market's nakedness," it's not a stupid, hidden party pussy shot at any political/or other "leader."
Tyler, why do you bother posting these articles? Those on ZH know there is no more "market" (SEC market task force excludes Retail firms) simply
a bunch of computers trying to outfox each other.
Since they cannot raise rates for the game to continue, the real "black swan" event will be social unrest such as we saw in Baltimore this weekend. I was at a barbecue yesterday and not one person knew of the rioting, just the MSM reported "peaceful demonstrations". Eventually they won't be able to hide the tension smoldering beneath the surface and then all bets will be off.