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Here's Why Earnings Revisions Should Worry You More

Tyler Durden's picture





 

In the last year, consensus EPS for 2012 among those oh-so-smart equity analysts has been crushed from over $113 to under $104 but multiple expansion has held the index together on the back of the hopes and dreams of a hockey stick recovery in Q4 thanks to a 'this-time-is-different' response to NEW QE at some point. Goldman has a different perspective. The Earnings Revision Leading Indicator points to a dramatic drop in ISM as micro data not just comfirms macro data but notably points to further weakness. Of course this will be eaten up by all asunder as bad-is-good but worse-is-better, but we worry that the scope of the drop is extreme and given a far more 'aware' market (as Stephen Roach alluded to) that this hole might just be too large this time.

 

with the 29 sub-indices of the leading indicator showing not just mostly negative growth but fading momentum also...

Source: Goldman Sachs

 


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Wed, 07/25/2012 - 12:52 | Link to Comment Jason T
Jason T's picture

Personal Income growth is going to tank next year.

Wed, 07/25/2012 - 13:00 | Link to Comment CClarity
CClarity's picture

Let's just call it what it already is for most . . . personal income shrinkage.

Combined with personal expenditure expansion => road to nowhere but the poor house and "f" the regular guy.

Wed, 07/25/2012 - 12:53 | Link to Comment Dr. Engali
Dr. Engali's picture

At this point do market participants really think we are going to recover? Are they really that stupid?

Wed, 07/25/2012 - 13:09 | Link to Comment I Am Not a Copp...
I Am Not a Copper Top's picture

What market participants? What friggin' market???

Wed, 07/25/2012 - 13:17 | Link to Comment gatorengineer
gatorengineer's picture

machines are people too.....

Wed, 07/25/2012 - 13:11 | Link to Comment Hype Alert
Hype Alert's picture

market participation, like audience participation requires more than just the actors on the stage.

Wed, 07/25/2012 - 13:04 | Link to Comment SheepDog-One
SheepDog-One's picture

WTF everyones banking on a 'hockey stick Q4 recovery'? Insanity. They've been spewing 'NEXT quarter, we'll see HUGE RECOVERY!' for 4 years now!

Well I wont feel sorry for any of them when theyre steamrollered, and also slammed by this  'imminent QE3NEW' nonsense when it never actually happens. 

Wed, 07/25/2012 - 13:10 | Link to Comment TrustWho
TrustWho's picture

Fiscal Cliff is creating such chaos within the business community in my area that owners are hunkered down keeping inventories at bare minimum, so QE3 will have NO positive impact here.

I hope Daddy Bernanke understands the problem he will create if he executes QE3 and the stock market FALLS!  

Wed, 07/25/2012 - 12:55 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

More good news!

Wed, 07/25/2012 - 13:04 | Link to Comment HD
HD's picture

Do algos worry?

Wed, 07/25/2012 - 13:35 | Link to Comment earleflorida
earleflorida's picture

only if their programmer is dieting on  'bath salts'

Wed, 07/25/2012 - 13:17 | Link to Comment Meesohaawnee
Meesohaawnee's picture

what does Cramer say? thats all that matters.

Wed, 07/25/2012 - 13:31 | Link to Comment alarm bell
alarm bell's picture

It is from swimming in a cold pool honest.

Wed, 07/25/2012 - 13:39 | Link to Comment fonzannoon
fonzannoon's picture

I was worried about earnings but Stephen Roach just told me QE is coming next week....

Wed, 07/25/2012 - 13:52 | Link to Comment TrustWho
TrustWho's picture

only idiots worry about earnings when you have such a loving Daddy like Daddy Bernanke. He is like Jesus Christ. He absorbs all human pains so his children can be happy children and ultimately unruly brats.

Wed, 07/25/2012 - 14:30 | Link to Comment Doublescythe
Doublescythe's picture

In Obama we trust.

It's over people.

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