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"You Are Here"... And It Is A Scary Place
Technically, the third quarter earnings season is not exactly over: 2% of companies are still left to report. Untechnically, it is, and with 98% of S&P500 companies now in the history books, 74% of the companies in the index have reported earnings above the mean estimate but 45%
of the companies have reported sales above the mean estimate.
But while gaming analyst estimates is the oldest trick in the book (and even so more than half of companies are failing to beat on sales), a truly dire picture is revealed when one steps back and looks at the data in historical basis.
That is precisely what Ellington Management did recently in their note looking at the last stretch of the junk bubble. This is what they said.
Corporations are now running out of steam in terms of their ability to generate earnings. As of Q2 2015, the year-over-year change in annual corporate earnings dropped to -$8.21 per share for the S&P 500 and to -$4.79 per share for the Russell 2000. The previous three times this metric fell that far into negative territory on the S&P 500 were Q1 1990, Q1 2001, and Q4 2007, coinciding with the start of each of the last three high yield default cycles. According to a recent article in The Economist, in the most recent quarter less than half of S&P 500 companies recorded increasing profit year-over-year.
And here is Ellington's chart showing where "You" are right now.
And since it is not where you "are" that matters but where you "are headed", the place is very scary indeed.
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Gather all the corporate CFOs and have them re-work the figures. Carry on.
That won't work. Corporations are running out of steam because of greed and because of the ingrained flaw that is in the entire financial system >> http://wp.me/p4OZ4v-2GY
Sooo.......this is bullish?
indeed, moar qe.
More stock buybacks?
Regards,
Cooter
I say they should buy those Bits of paper with bits of paper backed by more debt that will never be paid back. Where's my yarmulke I'm a genus
second term election, so default time and let the next regime take a shot. default is a must for the game to continue.
yup, as you see and listen and read more, Imagine how PISSED people on Zero hedge will be when they get more QE.
Hey! NOT saying its definate, but it COULD happen.
==> READ THIS STORY HERE <= about a trader who lost $200,000 USD and trying to get people on crowdfunding to pay him back. LOL
you see all these traders who think you just SHORT in a bull market, and make money. They are blowing up their accounts left right and centre. OH DEAR!!
I been hearing on many blogs about this 1987 like crash coming, but every time we dip, the market goes right back up to the highs. Hmmmm. I think I am starting to see a patter here no?
Pissed? Unlikely. Unsurprised is probably more adequate.
But the good people of ZH at least realise that you can't continue to create debt at a near exponentail rate with zero consquences.
Also, please talk quietly as not to disturb the sleeping $18T elephant in the room and his friend, Derivativezilla.
(Pssst....that guy isn't a trader, he's a moron.)
but, but, but, it's different this time, right?
Only if one is a matador !!!
as i recall, one moar injection and that "feeling" will be achieved...
Yeah, just like a heroin addict says about their next fix... That is until that one wears off and they need another and another and another...
"Sooo.......this is bullish?"
Always. There's an election coming up.
2008 election didn't work out so well. Seems we had a nasty little financial crisis about that time.
Always!
Markets (or anything else for that matter) are no longer allowed the freedom of choice or action or thought. Its a brave new world of only positive balance & vibes, provided to you, for you, by your benevolent, altruistic technocratic benefactors tirelessly working those levers behind the scenes!
We should all enjoy their uncompromising magnificence, while it lasts ;-)
" I love the smell of 1928 in the morning. It reminds me of people who deserve it jumping out of buildings. "
Corporations are running out of steam because of greed and the basic flaw that is ingrained in the entire financial system >> http://wp.me/p4OZ4v-2GY
I have a sick feeling that 2008 will be looked back fondly as the "good old days".
2008 was the good old days when some semblance of fundamentals mattered. Before the dark times of central planning.
germanies fall is a good historical reference...
The charts are not seaonally adjusted. They should represent a flat line gradually going up till after we are all expired.
Fed's QE4 coming up. An ever larger QE for the Federal Reserve. Always. A pause then a larger QE.
This QE will make Krugman happy.
QE until the dollar collapses.
Dramatic chart, but wait, buybacks artificially increased EPS over the past 7 years. A simple slowdown in those backbacks will show up as a plunge below 0 on that YoY chart. Misleading. YoY quarterly earnings would be a more informative chart as it ignores the ebbs and flows of shares outstanding manipulation.
An inaccurate construct...Worthless.
"U R here" charts are always big fails.
caterpilar industries is the writing on the wall
Has anybody seen Kim lately?
Making money has something to do with this?
I'd like to see what is to the right of the 'you are here' area. Historically, what happens next?
1937, the Soviet economist Alexander Chayanov was shot during Stalin’s purges. Prevailing Marxist orthodoxy envisioned this class hurtling inevitably towards capitalism as its members sought their own advantage;* against this, Chayanov emphasized the resilience of the peasantry. And not only that, he postulated that the unwaged peasantry operated in an economic constellation alien to the classical model of value maximization — and would rather tend to relax labor once it reached subsistence production, rather than working ever onwards to attain surplus value and Five-Year Plan quotas.
This theory accurately anticipated difficulty for Soviet agricultural policies like collectivization and grain confiscation.
Denounced as an apologist for the refractory kulaks — official agrarian bogeymen of the early Soviet state — Chayanov was arrested in 1930 and found himself shipped to a labor camp in Kazakhstan. He was re-arrested in 1937, tried, condemned, and shot in a single day; his wife Olga also disappeared into the gulag only to be released in 1955, after Stalin’s death. They were officially rehabilitated in 1987 under Mikhail Gorbachev.
Headsman
The Septic Tank, is being drained.
I can't wait to see how all those >>>one way bond flows>>> Tyler warned us about. <work out
I won't mention corporate debt, and all those laughable ETF's
I'm just getting started on mortgage backed securites.
The real/ canary in the coal mine/ is commercial real estate.
Yum Yum
Treasuries always work out but there is no inflation.
I will fight until the end. My best car died and it was because of a woman that I call my wife. It is her car. The battery is completely dead. I always use a AA battery to check and I got my 1.59 volts. I brought the woman with and showed her the battery out of my Harley. I told her that it was shot and put my multi tester on it... 11 volts. It is ruined but I knew that. Shit like that does not sneak up on me.
So I put the mutilmeter on the car battery and it wouldn't move. That battery is completly dead but how? We have six to ten inches of snow coming and my best car is down already. That is not OK, I fired up my 4x4 truck, drove right over the curb, and drove the fucking thing across the lawn so that I could try to jump start the the car. I hooked up the jumper cables and the horn started beeping. They already don't like me here because I might be a little bit whtite trash.
The car thinks it is being stolen. You have to do a sequence on your key fob I guess to shut the horn off. There is also an engine shut off switch. I guess the override is uner the door. This shit sucks, Steal the fucking thing if you need it that bad. This is not my strong point.
While fucking around with the car the wife mentioned that "Oh yeah, I turned that light on.". I am speechless. She said, "Well, I drive so many different vehicles that I forget sometimes." Take the 4x4 than woman.
Remember we still have the Chrysler van and the Lincoln and the 4x4 Chevy.
wtf another chart? we all know they're always wrong.
besides, lower fuel, QE, Putin and Christmas will bail out the S&P/DOW/NAZ/RUSSELL/BDI whatever