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Advance Look At Next Week As 33% Of The S&P Market Cap Reports Earnings

Tyler Durden's picture




 

With the near record melt up in stocks last week already history, vacuum tubes are already eagerly awaiting the next week of wild and crazy momentum swings in which earnings season comes with a bang as 100 of the S&P 500 companies, or 33% of the total market cap, reports earnings. And even with lowered earnings expectations, hence the upcoming beats, the trailing 4 quarters of S&P 500 earnings which are now expected to come at $94, will represent a new all time high, over the $91.47 record set in Q2 2007, and well above the $90.91 LFQ posted last quarter. As Goldman notes, "To remain below the previous peak, earnings would have to miss current bottom-up consensus expectations by 10%, which would represent a significant shortfall." As for what Goldman, or specifically what its clients expect, here is the rundown: "Conversations this week focused on the 3Q earnings season as investors look to use this earnings season to benchmark  company performance in light of the uncertain macro environment. Solid micro data from earnings results could represent a stabilizing force in a market where volatility had been extremely elevated. Better-than-expected or in-line results would indicate firms can continue to produce strong profit growth despite weaker economic data, matching the pattern in both 1Q and 2Q 2011. However, high correlation will act as a  market headwind if earnings disappoint. Average 3-month stock correlation for S&P 500 stocks rose significantly in August to nearly 0.75 and remains near record-high levels." However, so far earnings have been more or less a dud, with the exception of Google: "This week AA reported earnings below consensus estimates on higher costs and slowing European demand. SWY beat EPS estimates despite margin pressure. JPM results were largely in line with expectations after excluding one-time items." Well, no, absent the "benefit" of JPM effectively buying CDS on itself, it would have missed consensus by 20%. Expect the same gimmick to be used by all other financials.

Lastly, as to what one should expect from management teams: 'We expect management commentary on the quarterly conference calls will echo the uncertainty theme that featured prominently last quarter. Managements remain concerned about the prospects for the US and global economy, political policy, and consumer demand, and we expect limited company-level earnings guidance for 2012. Companies will continue to discuss input cost inflation and its impact on pricing and margins." And when needed, they will blame it all on market volatility: long gone are the days when a double digit move in the DJIA was a normal thing.

Some charts looking at the coming week:

And the past one:

Full report:

 

 

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Sun, 10/16/2011 - 11:27 | 1778767 TradingJoe
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And somewhere in China a sack of rice just fell over!!!

Sun, 10/16/2011 - 11:34 | 1778779 DavidC
DavidC's picture

Nice one TJ.

DavidC

Sun, 10/16/2011 - 11:35 | 1778780 slaughterer
slaughterer's picture

Really, this earnings season will be the S&P's Last Hurrah for a long time.  Better make it seem good while it lasts.  

Sun, 10/16/2011 - 12:18 | 1778837 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

It will be interesting to see how Americans react if corporations fully recover from the Fall of '08 and unemployment stays above depression levels.

Most likely, due to the idiocy of the status quo, people will think that if stocks recover, the economy is not far behind, giving Bernanke exactly what he worked for.

If America gets fleeced by the corporations, and instead of understanding that it is the corporations that are responsible for the systemic risk in the system, not the individuals in charge, will the people make a prudent change?

Most likely Occupy continues to ask for change while corporations make profits from jobs overseas.  If only the Hegelian dialectic could be destroyed, if only the 14th Amendment could be abolished, then there would be change.

Sun, 10/16/2011 - 11:36 | 1778781 slaughterer
slaughterer's picture

Tyler, what was your take-away from the G-20 statement that came out yesterday?  I am still waiting for the definitive ZH report.   Looks like Eurozone is on its own.  

Sun, 10/16/2011 - 12:26 | 1778856 slewie the pi-rat
slewie the pi-rat's picture

thus saith the choreographed propaganda

the EU must now legally re-create itself from a car full of clowns to a gaggle of highly sophisticated, knowledgeable, and successful Central Planners operating under the wisdom and moral guidance of the international banksters

stay tooned

Sun, 10/16/2011 - 13:01 | 1778905 narnia
narnia's picture

they issued a big press release on friday saying the EU was on its own.  then, they issued a small press release saying the opposite on saturday.  

they are going to expand the IMF to the mother of all central banks.  that is custer's last defense in the battle of little bighorn.

Sun, 10/16/2011 - 11:49 | 1778788 Samsonov
Samsonov's picture

What, someone still cares about earnings?  It seems all anyone wants to think about is Banana Ben, Greek CDS, and vacuum tubes.  How dare you mention earnings in the context of the stock market.  You're going to get it bad on this message board.  I can't wait to read the howls of derision for even implying that there is some rationality in the market.

Sun, 10/16/2011 - 13:48 | 1778960 SheepDog-One
SheepDog-One's picture

Funny in 4 weeks we've gone from the entire market depending on Bernank's announcement of more endless free money, to now 'earnings and volatility are what matter'? I wouldnt bet on this market with Monopoly colored money.

Sun, 10/16/2011 - 14:12 | 1778994 rocker
rocker's picture

Funny how Goldman did not let us read this stuff for three/four weeks. Now they put it out to us.

Hmmmm.  Must be time to sell soon. Again. 

Sun, 10/16/2011 - 15:16 | 1779124 Samsonov
Samsonov's picture

Wouldn't you?  All that money the government prints goes to hire workers or to give to people directly.  And guess what?  They spend it.  Nearly half the population is spending printed money, and it goes to companies making the things they buy.  Earnings and profits will therefore remain good.

Sun, 10/16/2011 - 15:56 | 1779236 RSloane
RSloane's picture

I don't doubt for a moment that Bernanke is still printing, and I don't doubt for a moment that he's in the stock markets. That's why I don't see a reversal of an upward trajectory happenning anytime soon. It would require a change in the presidency and a change in the FED, and that is not going to happen no matter how badly I want it to.

Sun, 10/16/2011 - 11:48 | 1778792 YesWeKahn
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AAPL, MSFT, INTC, CSCO, and many other techs will beat.

Sun, 10/16/2011 - 12:29 | 1778864 d00daa
d00daa's picture

... and every shitty financial will miss (sans CDS gimmickry)

Sun, 10/16/2011 - 13:22 | 1778930 junkyardjack
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I've got my AAPL $1000 hat

Sun, 10/16/2011 - 11:51 | 1778800 bartek
bartek's picture
Meet the Guy Who Snitched on Occupy Wall Street to the FBI and NYPD

 

http://gawker.com/5850054/

Sun, 10/16/2011 - 12:01 | 1778808 Rainman
Rainman's picture

Who gives a shit about earnings anymore...?? The accounting is/has been rigged for years to produce a believable market moving result. Watch 4 central banks. That is all.

Sun, 10/16/2011 - 12:04 | 1778809 RobotTrader
RobotTrader's picture

Poor Doug Noland

Got nailed again by a "Rip Your Face Off Rally"

"From October 4th (a mere week ago Tuesday) lows, the S&P500 rallied 12.3%.  The S&P400 Mid-Cap index jumped 14.5%, and the Morgan Stanley Cyclical Index surged 17.1%.  The Nasdaq 100 jumped 13.9% from October 4 lows.  The CRB Commodities index jumped 7.8%, with crude oil up 13.7%.  The Australian dollar jumped 9.2% and the Brazilian real rose 7.2%.  Italian CDS fell 50bps.  China CDS dropped 63 bps. 

Risk markets reversed course, inciting a stampede of buying to reverse hedges and bearish short positions – unleashing powerful short-squeeze dynamics.  Rather quickly, illiquid markets turned liquefied - and animal spirits again incited intense buying rather than the selling that has been overwhelming markets the past month or so.

“Risk off” and bearish bets were pulverized."

http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10583

 

Sun, 10/16/2011 - 13:39 | 1778954 gjp
gjp's picture

Well read the whole essay and it provides food for a little more thoughtfulness than your take.  The intesnse manic depressive volatility in the market is in no way healthy and only sets up for an even uglier episode when the debt edifice gets shaky again.  There's no way the debt can be serviced, and short of unlimited guarantees from creditor countries (Germany, BRIC?, Middle East oil producers?), it falls apart immediately.  And how long can even that support the pile of compounding obligations?  Germany can surely see that a blank check brings hyperinflation, and fast.  As he says, the market is more wise to the long-term unsustainable debt dynamic than it was in previous cycles.  Go ahead and celebrate these melt-ups, but there is no cause for any optimism beyond the near-term casino that I can see.

Sun, 10/16/2011 - 13:51 | 1778967 SheepDog-One
SheepDog-One's picture

Robo says it was 'intense buying'...yea on vapor volume...sure.

Sun, 10/16/2011 - 12:19 | 1778815 slewie the pi-rat
slewie the pi-rat's picture

i hear that the accountants have been extremely creative in preparing this feast of bullshit

Sun, 10/16/2011 - 13:23 | 1778931 junkyardjack
junkyardjack's picture

A wizard did it

Sun, 10/16/2011 - 12:33 | 1778866 MFL8240
MFL8240's picture

Stimulus growth, retail margins down but sales up on give away prices, growth in China with a trade imbalance and manipulated accounting does not equal a positive result except in the shithole of the world,...Whore Street USA.

Sun, 10/16/2011 - 13:49 | 1778964 SheepDog-One
SheepDog-One's picture

Now volatility matters again?

OH ok...

Sun, 10/16/2011 - 16:46 | 1779331 buzzsaw99
buzzsaw99's picture

so then we can expect goldie to report double plus good?

Sun, 10/16/2011 - 19:38 | 1779668 disabledvet
disabledvet's picture

Markets are a discounting mechanism for news both good AND bad. What "the market" does day to day or week to week really is nothing more than a "sack of rice tipping over in China." It's not our job to say what the market will do one day to the next...but to ask the "simple questions" revolving around jobs, the economy, the OWS protests, etc...etc...Is Japan lying about Fukushima? Yes. Why? Is Europe lying about the need for alacrity in their response to their debt crisis? Yes. Why? Is the US working on a dramatic withdrawal of forces from the entirety of the Middle East? Yes. Why? These are questions that have meaning to BOTH bulls and bears. The MSM does a disservice to investor class when it simply ignores basic issues such as these. You will see it discussed here...ironically enough.

Sun, 10/16/2011 - 20:54 | 1779848 Hephasteus
Hephasteus's picture

Each companies earnings will be sufficient to merit more IPO's. The End.

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