Five Ominous Charts For Q2 Earnings

Tyler Durden's picture

It's early, but as we pointed out yesterday in our Q2 earnings preview, the background noise is starting to grow louder. With near record levels of negative pre-announcements post the financial crisis (most recently AMD and Cummins), we are shocked (shocked we tell you) that analysts could have got it so wrong. Expectations for Q2 2012 EPS Growth have dropped from a Viagra-based 'its-always-better-two-quarters-out' view in August 2011 of +11% to -1.8% today. What is not surprising is the hope-filled 14% S&P 500 EPS growth rate expected for Q4 2012! With EURUSD down almost 11% from Q2 2011, we can only imagine the FX translation impacts that analysts are desperately trying to goal-seek into their forecasts - which we presume accounts for the surge in Q4 when Europe will be 'fixed'. With negative macro surprises so disconnected from equity market performance (and implicitly hope for earnings), it seems there is notable room for disappointment.


1) Q2 2012 EPS Growth expectations have fallen from over +11% to -1.8% since August 2011 (priced in? - seems not, given...)


2) Near record levels of negative pre-announcements (which are accompanied by notable weak equity performance upon announcement) and moreover - positive pre-announcements are trending notably lower also...


3) But have no fear because it will all be fixed again by Q4 2012 (when revenues and earnings will hockey-stick back - why? well, because they have to right?)...


4) As everyone assumes that Europe will be fixed by then and the near 11% drop in EURUSD YoY for Q2 will be washed away...

5) US Macro Data reports were dramatically worse throughout Q2 2012 (and yet equities remain up on NEW QE hope - not earnings)...


Charts: Barclays, Goldman Sachs, Bloomberg

Comment viewing options

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

Of course all negative pre announcements will be ignored when earnings come out. So everything will "beat."

SheepDog-One's picture

The funniest part is as red warning lights are flashing everywhere, all sit complacent as ever....and one morning when it DOES all come crashing down again everyone will be running around yelling 'WHY didnt anyone WARN me!'

King_of_simpletons's picture

Look for news articles that will talk about how the shitty earnings is "not that bad at all". China slowdown, "not that bad at all". Outright theft on wall street, "not that bad at all". Who are they trying to convince ?

knukles's picture

This Viagra based hopium boner is over 4 years old now.


Arkilokoos's picture

consult physcian if hopium hardon last more than 4 years

Precious's picture

Scientists working on the LHC at CERN reported today that they have found a Global Recession.

SheepDog-One's picture

I guess theyre just trying to convince themselves at this point...certainly the retail public is long gone. Wall St media really just talking to themselves, as the Wall St suicide attempts ramp up....theyre 'not all that bad' I guess....better n expected probably.

jeff montanye's picture

retail has gone, to the bond market searching for yield.  the bond market collapse of the '30's followed the equity one but took many with it.  this time will be similar imo.  and remember, the chart below is the treasury; the corporates and municipals crashed a good bit before because of credit concerns.

Id fight Gandhi's picture

Saddest part is CNBC will be cheerleading every earnings "beat" without mentioning guidance was cut a few times prior to releasing it.

knukles's picture

as in masturbatory adjustment.

slap slap slap slap slap

SheepDog-One's picture

Earnings hijump bar now burried about 6 feet in the ground. 'Better n expected' and in Special Olympics earnings everyone gets a medal.

Precious's picture

The "street" is now a "subway".

eclectic syncretist's picture

I think what this Tyler is getting at is that when companies report earnings they will have to guide down for the rest of the year because expectations are too high.  Thus you should be out of the market before earnings start coming in.

And if the banks want more bailouts they had better report disastrous results and outlooks, in order to have any chance of making it politically palatable to the public.

Tirpitz's picture

The way you talk makes too much sense.

Today some German upper court asked for more time to review the ESM crap, leaving the political caste with an empty hand in the final poker game. And the opposite sides know this too well.

With Spain in the ropes, Italy tumbling, China turning South, and increased chances of rising fuel prices due to renewed Mid-East tension, the central banks have to do something. Last week's action was a drop in the desert, already evaporated, and either they open - unexpectedly - the floodgates to more liquidity, or we'll be in for a deepening depression.

I'd say we'll see the latter in any case, but the central banks are in the game to rescue their international banking buddies, so the only step they can take is to try papering things over, once more, and swamp the system with more and more liquidity. And in this case staying in the market would make sense.

Mark Carney's picture

So what you are saying is that JPM should NOT report their $200M inflow from this week?

Panafrican Funktron Robot's picture

Meanwhile, the CTFC managed to somehow do two things in a single day that are at least some semblance of window dressing for compliance.  I guess they formally defined what a "swap" is.  Mind blowingly obvious to most that have studied it, but this final definition gets us one step closer to actually being able to see "net" risk exposure on the financial WMD's.

fonzannoon's picture

If this is 2011 all over again take a look at last July. Whoa.

Meesohaawnee's picture

isnt it strange QE2 ended 6/30 last year and so did OT this year.. hmmm

SheepDog-One's picture

Yea in other words they dont have jack shit....when they try removing the IV's from the comatose patient, he goes flatline. And yet everyone is surprised each time.

SheepDog-One's picture

Hopium feedback loop.

Everythings fine, we got 'earnings season'....oh, earnings suck, you say? Nevermind all that...all will be fixed by Q4, somehow, we got it all priced-in anyway...RELAX and kick back! What could go wrong! Central banksters got your back mom n pop pensioners and 401K Bathrobe Brigades!

yrad's picture

"Come on baby, lets do tha twist!"

Nobody For President's picture

Q4 ils gonna be great - what fiscal cliff?

SheepDog-One's picture

Q4 ills are gonna be SICK, no doubt!

Dr. Engali's picture

So did PFG pre -announce?

Tirpitz's picture


Who? Where? Did anybody see my money??

knukles's picture

Mr. Whazzizname was gonna do it, but his announcement abilities rank right up there with his suicide skills


AAA looser.

SemperFord's picture

I am not going to wait for any announcement...I took my money out from optionshouse/penson, you can make some extra cash, lose it on your own but it's worse if some banker steals it so I am out. Only PM's for me.

crawldaddy's picture

Yeah,  Hope isnt a strategy, and hope doesnt spend.  Try taking some hope to the bank and see if you can deposit it?  go to your favorite store and at checkout look to see where you deposit your hope.



Ted Baker's picture


SheepDog-One's picture

SEC too busy investigating gay tranny midget porn.

mktfizx's picture

Wasn't most of the profit in the S&P 500 solely from AAPL last quarter?  Wonder what this analysis looks like ex. AAPL?

Shizzmoney's picture

ECRI's Achuthan: "We are already in a recession"

"Recessions aren't just about GDP.  GDP is often in the net black at the beginning of recessions.  It's about income and jobs."

Tell someone that lost a job in 2001, a short recession that saw 3 million jobs lost, that it WASN'T a recession. 

Replace 2001 with 2012.  You get the idea.  

geewhiz190's picture

it isn't simply the euro/usd. it's the usd/ everything else.  the dollar's quiet but steady advance against all currencies(some have crashed vs. the dollar) may pause or correct, but the dollar is going much higher and none of that will be good for the big cap exporters like CAT etc. etc.  Commodity prices as measured by the CRB look to be in postion for further declines.  China has been arranging swap deals like crazy with anyone they can so they can unload some of their increasingly worthless currecny on others, then sell the swapped currency (peso, etc.) for dollars which they are techinically short in some fashion and in some large yet not quantified amount.

Tirpitz's picture

If our good Chinese friends were short dollars, they would get hurt nicely in case of further dollar appreciation.

Technically the charts look as if the dollar rally could be nearing its end. Then, Europe cannot print without the approval of the German judicial system to the ESM. Euro currency short positions are still around 150,000 contracts, and the majority of participants tends to be wrong in the markets. Guess we've got to see whether 83.50 in DXY will be taken out or not.

Just wondering how GS and JPM are positioned.

Yen Cross's picture

 Like that putrid Alcoa 1cent beat, (6 cents vs 5 cents) on guidance that was originally 12 or 13 cents higher! What an effin joke, Brian "dumbo" Sullivan , and his perma B.S. crew at CNBS are!